Integrated Report2023

Contents
Corporate Management / Business Strategies
About the Furukawa Company Group Integrated Report 2023

2

Management Philosophy and Vision

3

The Furukawa Company Group: Segment Overview

5

The Furukawa Company Group’s Value Creation Process

7

Message from the President

9

Message from the Director in Charge of Finance

15

Management Strategies

17

Business Strategies

19

TOPICS

24

ESG Information
Sustainability in the Furukawa Company Group25

G: GovernanceDirectors, Audit & Supervisory Board Members,
and Executive Officers
E: Environmental

29

S: Social

42

35
39

Financial Information

1

Consolidated 11-Year Data

53

Management’s Analysis of Operating Results,
Financial Position, and Cash Flows

57

Consolidated Financial Statements

67

Corporate Data

71

Corporate History

72

FURUKAWA CO., LTD.

About Integrated Report

About the Furukawa Company Group Integrated Report 2023

Target Organizations
This report focuses on the activities of the Company and includes
information on initiatives at Group companies and overseas.
[Environmental Data]
Manufacturing Division of Furukawa Industrial Machinery
Systems Co. Ltd.; Takasaki Yoshii Works of Furukawa Rock Drill
Co., Ltd.; Sakura Works of Furukawa UNIC Corporation; Iwaki
Works, Semiconductor Material Production Section (Semiconductor Material Plant), and Optical Parts Works Production
Section (Optical Parts Plant) of Furukawa Denshi Co., Ltd.; Osaka
Works of Furukawa Chemicals Co., Ltd.; Ashio Office ofFurukawa Co., Ltd.; Furukawa C&F Co., Ltd.; Ashio Rock Drill
Co., Ltd.; and FRD Iwaki Co., Ltd.

Management/Business
Strategies

Publication Period
September 2023

Information Disclosure System
Financial information

Non-financial information

・Corporate Website(“Sustainability” Section)

・Annual Securities Report

・Corporate Governance Report・Financial Statements

・Sustainability Book

Sustainability

・Corporate Website(“Investor Relations” Section)

Integrated Report(this report)

Governance

・Presentation Materials,
etc.

Message from the
Finance Director

Company Names
Furukawa Co., Ltd.: The operating holding company of the Group
Furukawa Company Group: 32 consolidated subsidiaries andfive equity method affiliates
Core operating companies: Furukawa Industrial Machinery
Systems Co., Ltd., Furukawa Rock Drill Co., Ltd., Furukawa UNIC
Corporation, Furukawa Metals & Resources Co., Ltd., Furukawa
Denshi Co., Ltd., and Furukawa Chemicals Co., Ltd.

Message fromthe President

Referenced Guidelines- The International Integrated Reporting Framework, IFRS Foundation- Guidance for Corporate Value Creation, Ministry of Economy,
Trade and Industry (METI)- Sustainability Reporting Standards, Global Reporting Initiative(GRI)- Final Report: Recommendations of the Task Force on
Climate-related Financial Disclosures, TCFD
- JIS Z 26000:2012 Guidance on Social Responsibility (ISO 		
26000:2010), Japanese Standards Association

Target Period: April 2022–March 2023
(Some activities before and after this period are also included.)

About the GroupIn the fiscal year under review, the Furukawa Company Group is
integrating its Annual Report and Sustainability Report (previously
published separately) into a single report (Integrated Report).
We have also improved the content of the report, which isdesigned to provide all stakeholders with easier-to-understandinformation about our medium- and long-term strategies forsustainable enhancement of corporate value, as well as ourapproach and policies toward sustainability. For non-financial
information not included in this document (reports on activities
related to sustainability, numerical data, etc.), please refer to theseparate the Furukawa Company Group Sustainability Book 2023.
In addition to these reports, we post news releases and financial
results briefing materials on our corporate website in a timely andappropriate manner.
We have created this report in coordination and collaboration
with the departments concerned, and the edited result is published with the approval of the President & Representative Director, who is Chairman of the Sustainability Promotion Meeting.

Management Philosophy
and Vision

Editorial Policy

Furukawa Co., Ltd., website
https://www.furukawakk.co.jp/en/
Environmental
SocialChange in Fiscal Year Notation
Starting with this year’s Integrated Report, we have changed the English notation of “fiscal year” to match the Japanese-language report. Accordingly, the period from
April 2022 to March 2023 is now referred to as “fiscal 2022.” Similarly, the period from April 2021 to March 2022 is now referred to as “fiscal 2021.” Please note that
this differs from the fiscal year notation in the previous year’s Annual Report.

Forward-Looking Statements
This Integrated Report contains information about the Furukawa Company Group’s plans, strategies, and future prospects. Such information, which is based on information currently available and reflects determinations deemed rational by the Group at the present time, includes various risks and uncertainties. Actual results may differ
significantly from forecasts contained herein due to these changing uncertain factors.
Integrated Report 2023

2

Financial Information

Statement about Changes to English Financial Statements
As a company listed on the Prime Market of the Tokyo Stock Exchange, since April 2022 we have been translating and publishing financial statements and other materials
into English for timely disclosure. For financial statements and other information in this report, therefore, we use the English translation of our financial statements, which
are based on Japanese generally accepted accounting principles (Japanese GAAP). Those financial statements (based on Japanese GAAP) have been properly audited by
the firm that audited the Company’s Annual Securities Report.

Management Philosophy and Vision

Management Philosophy
The Furukawa Company Group will remain indispensable tosociety by always embracing a spirit of challenge, advancing
the technologies that have underpinned the foundationof society that originated in mining development.

Vision for 2025
“FURUKAWA Power & Passion 150”

Action Guidelines

Targeting consolidated annual operating profit
regularly in excess of ¥15 billion as we approach our150th anniversary in fiscal 2025

In order to live up to our Management Philosophy, we put
our Action Guidelines of Innovation, Creativity and Harmony
into practice, always bearing in mind the three key words thatbest represents the spirit of our founder: Luck, Stolidity andPerseverance.

Become a corporate group that leverages its
reputation for category leadership and uniqueness todeliver growthInnovation : We will work constantly at self-innovation by		 embracing a future-oriented mindset.
FURUKAWA Power & Passion 150
The “Power & Passion” symbol expresses the “power and speed”
and the “passion and enthusiasm” aspects of our businessapproach. The perfect red circle conveys the connections andbonds we have with customers, and “150” represents the 150th
anniversary of our founding in 2025, which is the year for achieving our vision.

Creativity : We will seek to create reliable, appealing		 products that meet market needs.
Harmony : We will improve management transparency and		 contribute to the development of a society that is		 in harmony with the environment.

Strategies for Achieving Vision for 2025
1 Increase the value of the Furukawa brand through 				“marketing-based management” that incorporates
		CSV perspectives
We will incorporate marketing into the core of management toprovide products and services recognized as valuable in changing
markets, as well as to resolve issues and problems faced by customers, with the aims of increasing corporate value and achieving
sustainable growth. We will also strive to achieve the Sustainable
Development Goals (SDGs) and otherwise resolve various social issues, including such domestic issues as building national resilienceand the declining working-age population, and thus help realize asustainable society.

Reinforce technological sales capabilities (proposals andsolutions) reflecting customer needs● Develop products, technologies, and services that meetmarket needs● Achieve category-leading positions by concentrating on
niche products that have competitive advantages and 		using a differentiation strategy● Cultivate and create new markets and product 			categories; build a new business model●
Enhance our products, technologies, and services, which
underpin our social infrastructure, to help resolve social 		
issues●3

FURUKAWA CO., LTD.

2 		Sustainably expand the Machinery business

Reinforce revenue bases in growing overseas markets mainly		in businesses related to infrastructure and resource 			development●
Strengthen and enhance stock business●Maximize business opportunities by demonstrating
		comprehensive Group competencies and reinforcing
		engineering strengths●

3 		Strengthen and expand our human resource bases

Build vibrant human resources and corporate culture for		a new Furukawa●
Secure, utilize, and develop diverse human resources in		Japan and overseas●
Put even more effort into training sales and marketing		personnel●

4 		Actively promote investments to increase corporate value●●

Make proactive capital investments necessary for growth
Expand business through strategic M&As and alliances

5 		Establish a robust corporate foundation●
Increase corporate value by improving profitability and		capital efficiency, targeting ROE of more than 10%●
Establish a strong financial base●Achieve balanced appropriations between investments 		
		for growth and return to shareholders●
Increase corporate value by emphasizing business		practices that reflect CSR and ESG issues recognized and		to be solved by the GroupAbout Integrated ReportManagement Philosophy
and Vision

About the Furukawa Company Group

Founder Ichibei Furukawa

Message fromthe President*1 “Marketing-based management”
This means incorporating marketing into the core of management to provide products and services recognized as
valuable in changing markets, as well as to identify and resolve issues and problems faced by customers, with theaims of deepening ties with customers, achieving sustainable growth, and increasing corporate value.

Ashio Copper Mine (around 1920)
Message from the
Finance Director*2 CSV (creating shared value)
This is a management framework that enables companies to co-create “social value” and “corporate value” bytackling social, environmental, and other issues.

Management/Business
Strategies

Positioning of Vision for 2025

Sustainability

Vision for 2025
FURUKAWA Power & Passion 150

Management
Philosophy

Vision for 2025

PDCA

･ Materialities (Key Issues) on
sustainability initiatives

Medium-term business planand strategies
Action Plan

･ Management Strategy Meeting(Rolling forward the mediumterm plan)･ R&D / Commercialization Committee

PDCA･ Sustainability Promotion Meeting

Budgeting / planning foreach fiscal year
Action Plan

SocialInnovation Creativity Harmony

Action Plan
･ Business strategy･ Financial strategy･ Business portfolio strategy

Environmental

FURUKAWAPower & Passion 150

Long-term business plan and strategies
Governance

The Furukawa Company Group will remain
indispensable to society by always embracing a spiritof challenge, advancing the technologies that haveunderpinned the foundation of society thatoriginated in mining development.

Action Guidelines

About the GroupThe key to the success of the Furukawa Company Group, which recently celebrated the 148th anniversary of its founding, began with the development of the Ashio Copper Mine by founder Ichibei Furukawa. Since then, we have moved in line with the times and developed and advanced our technologies,
amassed through mine development, to build our two current business domains: the Machinery businessand the Materials business. Today, we are increasing our focus on niche products that reflect ourexpertise and boast a high market share. We are also stepping up efforts to practice “marketing-based
management”*1 that incorporates CSV*2 perspectives by deploying our unique technologies and pastexperience. In particular, our Machinery business, positioned as a core business, responds to market
needs and contributes to the development of social infrastructure.
By continuing to offer products that are indispensable to society, we aim to resolve various social
issues and help realize a sustainable society. We are working hard every day to achieve our Vision for2025, entitled FURUKAWA Power & Passion 150, as we approach fiscal 2025, the 150th anniversary of
our founding.

･ Management Strategy Meeting ･ Sustainability Promotion Meeting･ Management Committee･ R&D / Commercialization Committee

Financial Information

Integrated Report 2023

4

The Furukawa Company Group: Segment Overview
The Furukawa Company Group has adopted a group management structure in order to excel against global competition in a rapidlychanging market. With Machinery (Industrial Machinery, Rock Drill Machinery, and UNIC Machinery segments) and Materials (Metals,
Electronics, and Chemicals segments) as our core businesses, we are working to maximize our corporate value and thus remain a company
that is indispensable to society.

Fiscal 2022 Results
Net sales

Operating profit(millions of yen)(millions of yen)Segment

9,031

Industrial
Machinery

17,943

Industrial
Machinery

1,515Rock Drill
Machinery

Rock Drill
Machinery

27,961

●

●

●

●

●

●

UNIC Machinery

3,030

●

Rock Drill Machinery

Machinery business

35,752

UNIC
MachineryStrengths and Features

Industrial Machinery

214,190

UNIC
Machinery

Metals

MetalsElectronics

500

532

Real Estate Real Estateand others and others

5,727

629

Composition Ratio of Net Sales andOperating Profit of
the Machinery Business

FOCUS

80%*
Composition
Belt conveyors
ratio ofoperating profit

66.0%

Tunnel drill jumbos
Composition
ratio ofnet sales

38.1%

Note: “Composition ratio of operating
profit”
Shield pumpsrefers to the percentage of the total after
deducting others and adjustments

5

FURUKAWA CO., LTD.

●●

Contractor business, undertaking orders
ranging from design to construction(bridges, belt conveyors)
Majority of sales generated in Japan
High market share as the only
comprehensive manufacturer of rock drill
machinery in Japan
In-house production of core hydraulicequipment (high-precision machining andheat treatment)
Approx. 60% of sales generated fromoverseas
50% share of domestic market for bothtruck-mounted cranes and UNIC carriers
In-house production of core hydraulicequipment (such as cylinders, valves, andother key components)
Approx. 80% of sales generated in Japan
Production of electrolytic copper throughentrusted smelting
Electrolytic copper production: Approx. 46,000
tons per year
High market share maintained for highpurity metallic arsenic both in Japan andoverseas
Growing demand for aluminum nitride ceramics(heat-dissipating component)
Prividing sulfuric acid and its derivative
products, which are essential basic
materials for various industries
Prividing copper oxides for ship-bottom
paints and copper plating

Ownership of Muromachi Furukawa Mitsui
Building (commercial name: COREDO
Muromachi 2), containing offices, retailfacilities, and a movie theater

Real Estateand others

8,454

6,926

●

Chemicals
Real Estateand others

Chemicals●

Chemicals

1,276

●

Electronics

Materials business

111,424

Electronics

●

●

1,547

Metals●Support for section plant construction,
including pumps and material machinery,in addition to selling individual products

Priority Fields of the Machinery Business

Concrete
To mine for crushed stone andlimestone, which are raw materials forconcrete, we supply hydraulic crawler
drills that are used to drill holes inrock, in which gunpowder is inserted
for blasting. We also have hydraulicbreakers, which are used to break large
rocks into small pieces, and crushers
and screens, used at plants to achieve
the desired rock sizes. These products
contribute to demand for concrete invarious areas.

*Domestic market share

65 %*Hydraulic crawler
drills15%*
Crushers

40%*
Hydraulicbreakers

Crushes and cuts
bedrock into
small pieces
Material for
concrete andthe likePumpsDrainage facilities of factories, sewage treatment plants, shieldtunnel construction sites, etc.

Sewage pumps for sewage treatment(Japan): 60%
Slurry pumps (Japan): 40%

Material machinery

Quarries, limestone mines, steel works, smelters, cement plants,
etc.

Crushers (Japan): 15%

Infrastructure businessNew construction of steel bridges, construction of conveying earthand sand, disaster prevention and mitigation-related works, etc.

Hydraulic breakers

Strip mines (quarries, etc.), civil engineering and construction
sites, demolition sites, etc.

Japan: 40%

Hydraulic crawler drills

Strip mines (quarries, limestone mines, etc.), overseas
infrastructure works, etc.

Japan: 65%

Tunnel drill jumbos

Mountain tunnel construction sites, dam headrace construction
sites, etc.

Japan: 80%

UNIC cranes

Civil engineering and construction sites, material handling,rental companies, etc.

Japan: 50%

Mini-crawler cranes

Narrow or rough ground, indoor work sites, rental companies,
etc.

Japan: 40%

UNIC carriers

Car dealers, transportation companies, road construction
companies, etc.

Japan: 50%

Electrolytic copper

Electric wires, copper elongation products, home appliances,
communications equipment, automobiles, etc.

High-purity metallic arsenic

PCs, smartphones, infrared luminous parts, red LDs/LEDs, etc.

Aluminum nitride ceramics

Semiconductor manufacturing equipment components, highpower LDs/LEDs, resin-based heat-dissipation sheets, etc.

Sulfuric acid and derivative products

Chemicals, electronic devices, steel, food processing, and otherindustries, as well as water and sewage, etc.

Cuprous oxide /cupric oxide

Ship-bottom paints, printed circuit boards, etc.

Message fromthe President

Market Share (Company Estimate)

About the Group

Main Applications

Message from the
Finance Director
Management/Business
Strategies
Sustainability

Japan: 90%
Overseas: 60%

Governance

Cuprous oxide (Japan): 45%
Environmental

Muromachi Furukawa Mitsui
Building

Civil engineering and construction sites

We develop and manufacture tunnel drill jumbos, which are used to create
openings for loading gunpowder needed for rock blasting in mountain tunnel projects. We also develop and makebelt conveyors for transporting large
80%*
amounts of earth and sand, as
65 %*well as shield pumps, which
15%*
Tunnel drill jumbos
use water to pump
Hydraulic crawler
excavated earth and sandBelt conveyors
drillsCrushers
in underground tunnel
projects. Here, our drilling
and wastewater treatment
technologies, amassed
through mine developCrushes and cuts
40%*
bedrock into
small pieces
ment, come to the fore.

A single UNIC crane can transport and unload building materials and the like.
In addition to UNIC cranes, we offer mini-crawler cranes, which can operate
independently in places inaccessible by truck, and hydraulic crushers that playa major role at demolition sites. Our construction machines feature exceptional
65 %*functionality, operabil15%*
ity, and safety and are
Hydraulic crawler
also environmentally
40 %*drills50%*
friendly.
Crushers

Material for
concrete andthe like

40%**Domestic market share

Hydraulic crushers
Hydraulicbreakers

UNIC cranes

Financial Information

Hydraulic
Shield pumps
breakers

10%*

SocialTunnel projects*Domestic market share

Management Philosophy
and Vision

Main Products

About Integrated Report

Below is an overview of our main products, covering strengths and features, main applications, and market share. In the Machinery business,positioned as our core business, we provide products, technologies, and services in the priority fields of concrete, tunnels projects, andcivil engineering and construction sites in infrastructure projects that help resolve social issues, such as the need for disaster prevention andmitigation. In fiscal 2022, the Machinery business accounted for 38.1% of net sales and 66.0% of operating profit.

Crushes and cuts
bedrock into
small pieces
Material for
concrete andthe like cranes
Mini-crawler

Integrated Report 2023

6

The Furukawa Company Group’s Value Creation Process
The Furukawa Company Group has a long history of 148 years. Since our beginning in mine development, we have undergone varioustransformations, diversified our operations, and overcome many difficulties. This history forms the foundation of today’s Furukawa Company
Group. Embracing the philosophy of Ichibei Furukawa, our founder, we have practiced “marketing-based management” that incorporates
CSV*3 perspectives by developing mines and other technologies that support social infrastructure. As a result, we have continued to innovate
products and services that are reliable and appealing and satisfy social and market needs. With a commitment to “category leadership anduniqueness,” we aim to create “corporate value” by providing infrastructure, products, technologies, services, and the like that help resolve
social issues. At the same time, we will continue fostering the creation of “social value” by improving social infrastructure and realizing
a safe, environmentally friendly, and prosperous society.

Management Philosophy
The Furukawa Company Group will remain indispensable to society by always embracing a spiritof challenge, advancing the technologies that have underpinned the foundation of society thatoriginated in mining development.

Mining technologies
Exploitation
technologies

Drilling
technologies

Transport / Mineral processing
technologies

Hydrauliccontrol
technologies

Slurrytransportation
technologies

Grinding
technologies

Exhaust gas
treatment
technologies

StrategyRock Drill Machinery

UNIC Machinery

Industrial Machinery

Manufacture and sale ofhydraulic breakers, hydrauliccrushers, hydraulic crawler
drills, tunnel construction andmining machinery, etc.

Manufacture and sale of UNIC
cranes, mini-crawler cranes,
ocean cranes, UNIC carriers, etc.

Manufacture and sale of pumps,
crushers, and other material
machinery, bridges and belt
conveyors; various construction
contracts

Vision for 2025
Medium-Term Business Plan

ROE
ROA

CSR*1
ESG*2

*1 CSR
The purpose of our CSR activities is to realize ourManagement Philosophy of “remaining a company thatis indispensable to society.” This means fulfilling our
CSR to stakeholders—customers, business partners,
employees, shareholders and other investors, local
communities, and the global environment—byclarifying our responsibilities, considering andaddressing goals and issues, and explaining the
progress and outcomes of our initiatives.
*2 ESGThe Group recognizes ESG as one of the criteria for
corporate investment and an important perspective
for business operations. We strive to enhance
corporate value by clarifying the relationship between
Materialities (Key Issues), medium-term CSR targets,and relevant major SDGs by classifying them as CSR
and ESG issues in the environmental (E),social (S), and governance (G) fields.

7

FURUKAWA CO., LTD.

Machinery Business“Corporate Value”“Marketing-Based Management”

About Integrated ReportManagement Philosophy
and Vision

Seeking to realize our Management Philosophy, we are currently implementing our Vision for 2025 in the approach to our 150th
anniversary in fiscal 2025. The vision is divided into three phases, each with its own medium-term business plan. In our business activities,
which center on the Machinery business and the Materials business, we will bring together technologies cultivated over many years and new
strategies while also taking return on equity (ROE), return on assets (ROA), business portfolio management, corporate social responsibility(CSR)*1, ESG*2, and enterprise risk management*4 into account. We will also help achieve the Sustainable Development Goals (SDGs) andcontinue contributing to the realization of a sustainable society by resolving various social issues, including national resilience challenges, adeclining working age population, moves toward a decarbonized society, and disaster prevention and mitigation against climate change. This is theGroup’s value creation process for realizing its Management Philosophy.

About the Group
Message fromthe President

Smelting
technologies
Message from the
Finance Director“Category leadership and uniqueness”
Sulfuric acidproduction
technologies

Flash smelting
technologies

ChemicalsElectronics

Products /Technologies /Services“Social Value”
CreationManagement/Business
Strategies

MetalsElectric
technologies

Establish social infrastructure

Manufacture andsale of sulfuric acid,polyferric sulfate
aqueous solution,
sulfate band,
cuprous oxide,
cupric oxide, etc.

Manufacture andsale of high-purity
metallic arsenide,
crystal products,
coils, aluminum
nitride ceramics,
opticalcomponents, etc.

Materials BusinessSocial Issues /Needs

Financial Information*3 CSVFor the Furukawa Company Group, creating
shared value (CSV) means creating “corporate
value” by providing infrastructure, products,
technologies, services, and the like that help
resolve social issues. It also means fostering thecreation of “social value” by improving social
infrastructure and realizing a safe, environmentallyfriendly, and prosperous society.
*4 Enterprise Risk Management
One of the methods of risk management (crisis
management). It refers to a system that attempts
to manage all possible risks that may occur incorporate management on a enterprise basis

SocialThat Incorporates CSV*3 Perspectives

Enterprise
Risk
Management*4

Environmental

Creation through Business Activities

Business
Portfolio
Management

GovernanceSale of electrolytic
copper, electrolytic
gold, electrolytic
silver, sulfuric acid,etc. (produced
by entrusted
smelting agreement)

Sustainability

Realize a prosperous society that issafe and environmentally friendly

Integrated Report 2023

8

Message from the President

Complete Realization of our Vision for 2025
My mission is to achieve the targets set out inMedium-Term Business Plan 2025.
In 2015, we formulated our Vision for 2025, which depicted where
we wanted to be 10 years into the future. Having completed thefirst two phases of the vision, we have now entered Phase 3(the final phase). As president, my mission is to achieve the targetsof Medium-Term Business Plan 2025 as the final step in realizing
our Vision for 2025.

Minoru Nakatogawa
President & Representative Director

Review of Fiscal 2022
In fiscal 2022, the business environment recovered from thedownturn caused by COVID-19. During the fiscal year, we began
seeing the results of structural reforms in the Rock Drill Machinery
segment undertaken over the past several years. Furthermore,
exports of machinery products benefited from the weaker yen,
and although the soaring cost of raw materials had an impact on
production costs, we were able to pass on prices for someproducts, which also contributed to our business performance.
As a result, consolidated net sales increased 7.6% year on year, to¥214,190 million, and operating profit rose 16.8%, to ¥9,031
million. In the UNIC Machinery segment, we reported a decreasein sales mainly due to delays and cutbacks in truck production.

In the UNIC Machinery segment, sales of UNIC cranes declined
due to truck production delays in Japan, while in the Rock Drill
Machinery segment we adopted a policy of selection andconcentration targeting strategic markets. Alongside improvements in profitability, our asset efficiency (total asset turnover),which includes months of receivables turnover and months ofinventory turnover, also improved, helping us break away fromour long-standing performance slump. Moreover, the yen’s depreciation has also had a positive impact on the Metals segment, andconsolidated operating profit has recovered to the pre-pandemic
level. Accordingly, we are solidly positioned at the starting line of
the final phase of our Vision for 2025.

Final Year of Phase 2
Fiscal 2022 was also the final year of Phase 2 of Vision for2025. Phase 1 (April 2017–March 2020) was positioned as aperiod to “Build foundations for renewed growth,” with the aimof transforming ourselves into a new Furukawa Company Group.
During Phase 1, we positioned the Machinery business as ourcore business and took a major step forward in business structuralreforms by launching a business portfolio management system.
In the final year of Phase 1, we were able to record progress andposted consolidated operating profit of ¥8.6 billion (comparedwith our target of around ¥8.5 billion) and ROE of 5.8% (comparedwith our target of around 6–7%).
In Phase 2 (April 2020–March 2023), however, the COVID-19
pandemic made the medium- to long-term business environment
highly unstable and difficult to envision. Seeing this as a good
opportunity to reinforce our structure in order to achieve a swift
performance recovery, we focused on key priorities. In particular,
9

FURUKAWA CO., LTD.

the Rock Drill Machinery segment posted a V-shaped recovery,
and in the Metals segment we undertook a drastic review of theentrusted smelting business and terminated our copper smelting
contract with Onahama Smelting and Refining Co., Ltd. In theReal Estate business, we reached the final stage in plans to create
a future vision for the site of the former Furukawa Osaka Building.
In these and other ways, we made significant progress toward
resolving priority issues through structural reforms.
Consolidated operating profit increased every year in Phase 2,
from ¥5.5 billion in fiscal 2020 to ¥7.7 billion in fiscal 2021 and¥9.0 billion in fiscal 2022, thus recovering to pre-pandemic levels.
However, ROE started Phase 2 at 8.9% in fiscal 2020, when we
posted a ¥4 billion gain on sales of investment securities, butslipped to 6.9% in fiscal 2021 and 6.2% in fiscal 2022, so it
remains an issue for Phase 3.

Phase 3
FY2023–2025
Complete realization of
Vision for 2025

Phase 2
FY2020–2022

Medium-Term Business Plan 2025

Phase 1FY2017–2019

Expedite growth andfurther improve profitability
Medium-Term Business Policy 2022

Medium-Term Business Plan 2019

FY2022 results

Assumption
Operating
ProfitApprox. ¥13 billion
ROE
Approx. 8%

Operating
Profit¥9.0 billion
ROE
6.2%

FY2019 results

2019* Performance indicators in Medium-TermBusiness Plan 2025 do not account for new
alliances and M&As.

2022

Message from the
Finance Director

Operating
Profit¥8.6 billion
ROE
5.8%

Message fromthe President

Build foundations
for renewed growth

Performance
Indicators

About the Group

Creation of “corporate value” and“social value”*1 Established November 2015

2025

Medium-Term Business Plan 2025

Sustainability
Governanceour Vision for 2025” with the foundation of reinforced structure
and improved earning capacity during Phase 2. This also reflects
my very strong personal desire to realize Vision for 2025 at any
cost. During the period, we will strive to create “social value” bybuilding social infrastructure while realizing a safe,
environmentally friendly, and prosperous society. At the sametime, we will further refine our “marketing-based management”
that incorporates CSV perspectives, which has been our management policy for a long time. In addition, we will lay the groundwork for formulating our next long-term vision, looking beyond
2025.
In fiscal 2025, the final year of Phase 3, we have set a consolidated operating profit target of approximately ¥13 billion and
an ROE target of approximately 8%. We will also consider andexecute new alliances and M&As and otherwise work to swiftly
achieve annual operating profit that regularly exceeds ¥15 billion.

Management/Business
Strategies

In May 2023, the Furukawa Company Group announced its
Medium-Term Business Plan 2025. When formulating the plan,
which represents Phase 3 of Vision for 2025, our biggest
consideration was the significantly changing business environment. Many events have occurred since Vision for 2025 was originally formulated, including transformation of social life triggeredby COVID-19, as well as Russia’s invasion of Ukraine and escalating confrontation between the United States and China. Companies are also facing pressure to be environmentally,socially, and economically sustainable, with growing calls toachieve carbon neutrality due to the accelerating pace of global
warming.
In the current climate, it is difficult to predict the future andcorporate management are facing strong demands to be moresocially conscious. With this in mind, we have positioned the three
years of the plan as a period to achieve “Complete realization ofManagement Philosophy
and Vision

Become a corporate group that leverages
its reputation for category leadership anduniqueness to deliver growth

About Integrated Report

Targeting consolidated annual
operating profit regularly inexcess of ¥15 billion*1

Vision for 2025 (ideal image for 150th anniversary of foundation)*1

Mindful Approach to Cost of Capital and Stock PriceSpecific Initiatives for Improving Corporate Value
Creation Power
Achieving ROE of approx. 8%
Achieve consolidated operating profit of approx. ¥13 billion in FY2025
Improve capital efficiency● Reduce strategic shareholdings● Streamline and optimize equity capital● Shareholder returns●●

SocialDiminishing cost of capital
Appropriately disclose effective information related to reducing
non-financial risks and emphasizing active dialogue with investors● Pursue initiatives for sustainability● Invest in non-financial capital		 (R&D, IP, human capital, DX)● Reduce financial risks● Pursue optimal capital structure with rating strategy at the core●

Integrated Report 2023

10

Financial Information* “Corporate value creation power” is a term coined by the Company meaning
return on invested capital (ROIC) minus weighted-average cost of capital (WACC).

Environmental

To achieve sustainable growth and enhance corporate value overthe medium to long term, Medium-Term Business Plan 2025 sets
forth the two objectives aimed at enhancing our corporate value
creation power*: “Achieving ROE of approximately 8%” and“Diminishing cost of capital.” Since becoming president in 2021,
I have managed the Company with the stock price always in mind.
However, our price book value ratio (PBR) is now below 1x, whichmeans we have not been able to realize corporate value creation
power that meets market expectations. Therefore, getting the PBR
above 1x at an early stage is an important management priority.
To this end, we will expand and strengthen specific initiatives
to raise awareness of cost of capital and stock price and thus
enhance our corporate value creation power. We will also strive

Message from the President

to achieve a PBR of more than 1x as soon as possible by further
improving information disclosure and engaging in active dialogue
with shareholders to narrow information gap and other investors
so we can obtain an appropriate market evaluation.
With respect to achieving ROE of approximately 8%, we willsustainably expand the Machinery business, positioned as a corebusiness, to a new level to raise earnings above current figures.
In addition to strengthening the review of our business portfolio,
we will visualize product portfolio strategies within each businesssegment to improve profitability and identify low profit products.
By implementing these strategies, we aim to achieve consolidated
operating profit of approximately ¥13 billion in fiscal 2025. Meanwhile, we will improve capital efficiency by reducing strategic
shareholdings and streamlining and optimizing shareholders’equity through shareholder return measures. With regard to strategic shareholdings, each year we carefully examine the purposeof our holdings and sell shares deemed to be no longer necessary.
Although we have continuously sold multiple stocks in recent
years, we will continue disclosing the ratio of strategic shareholdings to consolidated net assets as an indicator of our progress in
reducing such shareholdings.
With respect to diminishing cost of capital, in addition tosustainability initiatives we will invest in non-financial capital—
R&D, intellectual property (IP), human capital, and digital transformation (DX)—disclose appropriate information that helps reduce
non-financial risks, engage in active dialogue with shareholders
and other investors, and appropriately manage financial risks bypursuing an optimal capital structure centered on our rating strategy.

Greater Focus on the Machinery BusinessTo concentrate management resources on our core Machinery
business and increase returns, we plan to raise our focus on thatbusiness under Medium-Term Business Plan 2025. Demand forthe offerings of the Group’s Machinery business is increasing year
by year. Accordingly, we will develop infrastructure that helps
address social issues in such areas as preventing and mitigating
disasters, which are increasing due to climate change. We will also
provide products, technologies, services, and other solutions toensure safe and secure workplaces for workers and help resolve
labor shortages. These strategies, which help create social value,
are the pillars of our business plan. Over the three-year period of
the plan, we will make cumulative capital investment totaling ¥14
billion in the Machinery business, representing approximately 70%
of total investments, to meet demand for automation, labor saving, and the like. The Machinery business accounted for 53% ofconsolidated operating profit in fiscal 2016 (before Phase 1) and
66% in fiscal 2022. We expect it to account for more than 80%
in fiscal 2025, the final year of Phase 3. Over the nine-year periodof our Vision for 2025, we anticipate that operating profit of theMachinery business will grow roughly threefold, to ¥10.7 billion.
With this in mind, we will strengthen the Machinery business by
renewing our focus and changing gears as necessary.

Basic policy

As part of our future initiatives, we have set growth strategies
to focus on in each segment of the Machinery business. In the
Industrial Machinery segment, we will focus on generating demand and promoting sales of our SICON® enclosed hanging belt
conveyor, which is an environmentally friendly product that helps
increase conveyance efficiency and reduce CO2 emissions during
earth and sand conveyance. We will also respond to increasing
inquiries about the conveyance of earth and sand for new dam
construction and renewal work, river flood control work, tunnel
construction, and the like. Currently, we import the conveyor belts
and other major components from our business partners, but weplan to further reduce costs through domestic procurement andproduction of components to improve profit margins.
The Rock Drill Machinery segment benefited from the yen’s
depreciation and a turnaround in business conditions in fiscal
2022. However, our ability to demonstrate our true capabilities
will depend on our efforts in fiscal 2023 and beyond. To achieve
stable profitability that is not affected by changing businessenvironment, we must build an “FRD model” to achieve customer
success to cover the overall life cycle of the products, with the aimof establishing product sales, parts sales, maintenance services,
operational support programs, and trade-in resale processes.

Practice “marketing-based management” that incorporates CSV perspectives

Machinerybusiness,
positioned as thecore business

Establish social infrastructure
Develop infrastructure that helps address social issues in such areas as preventing andmitigating disasters, which are increasing due to climate change
Realize a prosperous society that is safe and environmentally friendly
Provide products, technologies, services, and other solutions to ensure safe andsecure workplaces for workers and help resolve labor shortages

Industrial Machinery segment

Rock Drill Machinery segment

UNIC Machinery segment

Devote 70% of cumulative capital investment to the Machinery business,with the aim of that business accounting for 50% or more of consolidated net sales and
80% or more of consolidated operating profit

Step up efforts related to alliances and M&As to achieve discontinuous future growth

11 FURUKAWA CO., LTD.

Fosteringthe creation of“social value”

About Integrated ReportComparison of Operating Profit Composition Ratios

Note: “Composition ratio” refers to the percentage of the total after deducting others and adjustments.

Real estate
19%

Real estate
9%Compared to MediumTerm Business Materials
Policy 2022
Operating profit business25%
1.4 times

Operatingprofit¥9.0 billion¥3.5 billion

Real estate5%(Medium-Term Business Plan 2025)

Machinerybusiness
81%

Materials
business
14%

Compared to Medium-TermBusiness Plan 2025 (Vision)Operating profit

OperatingprofitApprox.
¥13 billion

1.4 times¥6.0 billion
Compared to Medium-TermBusiness Plan 2025 (Vision)Operating profit¥10.7 billion

Approx. 2 times

our subsidiaries in Panama and China in order to strengthen andrebuild our overseas marketing capabilities. In the Real Estatebusiness, we will work to create a future vision for the site of theformer Furukawa Osaka Building with the aim of solidifying ourearnings foundation for the future.
In Medium-Term Business Plan 2025, we will continue reviewing
our business (product) portfolio, positioned as a priority issue.

Business Portfolio Analysis (Vision)
Priority investments

Next-generation
businesses

Growth businesses
X%

Rebuilding
Business
restructuring

Withdraw/
sell-off

Stable profit

Environmental

Growth potential

Selective investments

Governance

Compound average growth rate(CAGR)

0%Core businesses

Corporate value creation power
Corporate value creation power (=ROIC−WACC)

SocialAllocation of Management Resources
estimated to total around ¥40 billion over the three-year period.
Of this amount, we will allocate ¥20 billion to capital investment,¥10 billion to shareholder returns (including dividends and sharebuybacks), and ¥10 billion to reduction of interest-bearing debt.
In addition to capital investment, we believe investing in nonfinancial capital, such as R&D, IP, human capital, and DX,
Integrated Report 2023

12

Financial Information

In allocating management resources, we place top priority on
making capital investments to strengthen our manufacturing
capabilities. Of the ¥20 billion in cumulative capital investment
earmarked for the three-year period, we plan to allocate ¥14billion, or roughly 70%, to the Machinery business. The sourceof these funds will be consolidated operating cash flows,

Sustainability

The Group has seven business segments: three segments in the
Machinery business, three segments in the Materials business,and the Real Estate business. In the Machinery business andMaterials business, the core operating companies are responsible
for overall management. We calculate cost of capital for each of
the seven business segments and plot corporate value creation
power, average annual growth rate of sales, and corporate value
created/year on a bubble chart to accurately visualize our businessportfolio. We then conduct a four-quadrant analysis based on
growth potential and corporate value creation power and makerational business decisions that are not overly influenced by history
or preconceptions. Going forward, we will visualize the productportfolio strategy within each business segment and work to
improve profitability and identify low-profit products. including
those considered for withdrawal.
Regrading reassessment of our business portfolio, in the Metals
segment we conducted a fundamental review of our entrusted
smelting business and subsequently terminated our copper
smelting contract with Onahama Smelting and Refining Co., Ltd.
on March 31, 2023. At the same time, Furukawa Metals &Resources Co., Ltd., transferred all its shares in Onahama Smelting
and Refining to Mitsubishi Materials Corporation. In the Rock Drill
Machinery segment, we are making smooth progress in liquidating

Management/Business
Strategies

Review of Business Portfolio

Message from the
Finance Director

Materials
business
28%

Machinerybusiness
53%

Machinerybusiness
66%

Message fromthe President

Operatingprofit¥6.5 billion

FY2022

About the GroupFY2025 (Vision)

Results
FY2016

Management Philosophy
and Vision

we will enhance competitiveness by increasing product functionality and added value and improving service systems for domestic business while strengthening the product, sales, and service
technology capabilities of our overseas business, with the aimsof securing stable earnings from domestic sales and expanding
earnings from overseas sales.

Regarding our support program for blast-hole drills, we havebegun offering paid services to support customers’ productivity
improvement, based on data accumulated from our support program for hydraulic crawler drills.
The UNIC Machinery segment was affected by truck production
delays in fiscal 2022, but we expect it to recover soon. Going forward,

Message from the President

is necessary to achieve sustainable growth and increase corporate
value over the medium to long term.
With respect to R&D investments, we will promote the commercialization and industrialization of development projects that
help resolve social issues. At the same time, we will revitalize ouron-site capabilities to improve productivity. In addition, we willdevelop automation technology aimed at labor saving, as well as
machinery-related products and technologies that deliver higher
efficiency and lighter weight and otherwise help reduce environmental impact. It is important to invest in IP. Accordingly, weregard IP activities as an important part of our management
strategy and will develop systems that utilize IP information tosecure a competitive advantage. We will also properly assess thevalue of our entire business, including IP, based on the technology
rights of each operating company in the Group.
Meanwhile, investment in human capital is essential for theGroup’s existence. With this in mind, we will continue investingin hiring and developing diverse human resources who are willing

Allocation of Management Resources
Allocation of Management Resources

Capital Investment Allocation (Vision)
Capital Investment Allocation (Vision)
Others1 billion¥Others¥ 1 billion
Materials
Materials
businessbusiness¥5 billion¥5 billion

to take on challenges and act autonomously. We will also reform
workstyles and promote health management, including by providing a rewarding and comfortable work environment.
In these days of digitalization and advances in IT, investing in DX
is an essential part of our overall investments as a corporation. In
April 2023, therefore, we established the DX Promotion Committee and put in place a groupwide promotion system to formulate
and promote DX strategies on a groupwide level. Going forward,
we will accelerate the Group’s growth strategy and operational
reforms and promote DX investments that reflect market needs
and support reliable and attractive manufacturing and value creation.
The basic resources for the above investments will be coveredby retained earnings and continuous operating cash flows.
Finally, we believe that investing in alliances and M&As is necessary to realize discontinuous growth. To fund these activities,
we will take the most appropriate financing measures, with theoption of using gain on the sales of assets, including strategic
shareholdings as necessary.

Support enhanced
Supportenhancedmanufacturing
manufacturing
Capitalinvestments

Accelerate growth Capital investments
Accelerate
growthstrategies
andbusiness
Help resolve social issues
strategies
and business
transformation
Help resolve
issuesInvestsocial
in R&Dtransformation
Invest in DX
Invest in R&D

Machinery
Machinerybusinessbusiness¥14
billion¥14 billion

Invest in DX

Ensure competitive
Ensurecompetitive
advantageadvantage
Investin IP

3-year3-yearcumulative
cumulative
total
total

Invest in IP¥20 billion¥20 billion

EnhanceEnhance
corporate
corporate
value
value

Achieve discontinuous growth
Achieve discontinuous growth

Invest in alliances
Invest in alliancesand M&As
and M&As

Create a rewarding company

Createa rewarding
company
Investin humancapitalInvest in human capital

Decarbonization, environmental
Decarbonization,
environmental
impact reduction,and respect for
impactreduction,
for
human
rights inandthe respectvalue chain
human rights in the value chain

Invest in
Invest insustainability
initiatives
sustainability initiatives

Proactive and Defensive Materialities
In November 2022, we announced 10 items of Materiality (Key
Issues) related to sustainability that we should address. We also
reviewed our existing CSR priority issues, identified “proactive”
and “defensive” Materialities as our sustainability initiatives, andclarified them as important management strategies. We are currently spreading the word internally and externally about what thismeans and why it is necessary. To date, we have been practicing“marketing-based management” that incorporates CSV perspectives and providing infrastructure, products, technologies, andservices that help resolve social issues, enabling us to create “corporate value” and “social value” at the same time. These efforts
are positioned as “proactive” Materialities. On the other hand,
we have positioned the enhancement of corporate value throughbusiness practices that take into consideration CSR and ESG issues
as “defensive” Materialities.
Concrete examples of “proactive” Materialities include belt
conveyors for infrastructure development and fully automateddrill jumbos that enhance the safety and efficiency of workers.
Supplying these products to society also helps us generate corporate value. We are also working to develop technologies that will
help resolve social and customer issues from an environmental
perspective. In addition to electrifying our products and making

13 FURUKAWA CO., LTD.

them more energy efficient, we help improve the work efficiencyof our customers, which further reduces their CO2 emissions andcontributes to emission reductions across the entire value chain.
For example, the Rock Drill Machinery segment provides Life Cycle
Support (LCS) to its customers. This allows us to share productoperational data, which facilitates new ideas and proposals forwork efficiency and load reduction. We will extend this initiative
to the Industrial Machinery segment, covering crushers, screens,and the like, to simultaneously improve work efficiency and reduce environmental impact. In recent years, we have also actively
recommended products that contribute to semi-automation andlabor saving to address manpower shortages at worksites.
Regarding “defensive” Materialities, we have set forth seven
items, including climate change countermeasures and respect forhuman rights. To address climate change, in August 2023 we
expressed our support for recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD) and decided topromote more active disclosure of information on the four core
disclosure elements of the TCFD recommendations (Governance,
Strategy, Risk Management, and Metrics and Targets). As a firststep, we conducted scenario analyses of the Rock Drill Machinery
segment and Metals segment to determine the impact of climate

About Integrated Report

Purchasing Department, we also conduct surveys of the status ofinitiatives at each of our suppliers to confirm their stance on human rights, elimination of child labor, anti-harassment measures,and other legal compliance issues, and we work to resolve any
issues identified through follow-up activities.

Environmental

To Our Stakeholders
my role is to make the Group a place where all employees feelenergized and fulfilled and motivated to demonstrate their abilities.
In conclusion, we will continue engaging in dialogue with stakeholders, including shareholders and other investors, to ensure theirunderstanding of Medium-Term Business Plan 2025. We will listen
sincerely to comments and suggestions as we work together toenhance corporate value and remain a company that is indispensable to society. We look forward to your continued understanding
and support of the Furukawa Company Group.

SocialThe recently announced Medium-Term Business Plan 2025 is
not merely an extension of the previous medium-term plan. It is
positioned as a “must-win” plan aimed at realizing our Vision
for 2025, and I consider it my mission as president to implement
it successfully at all costs. To this end, the Group’s officers andemployees must work together to realize the plan. Throughout
its nearly 150-year history, the Furukawa Company Group has
overcome multiple crises and corrected its course to recover andachieve renewed growth. To nurture this “ability to overcome,”

GovernanceTo evaluate the effectiveness of the Board of Directors, we conduct an annual questionnaire-based survey of directors and Audit& Supervisory Board members to assess the current status andidentify issues, and we link the results of the surveys to initiatives
for improvement. Compared with previous fiscal years, evaluationsof “free and vigorous discussions” and “communication between
internal and outside directors” have improved. Going forward,
we will modify the steps we take in enhancing our governancestructure in tandem with changing times and stakeholder expectations. In addition to enhancing the minimum governance structure
required by the Corporate Governance Code, we will build an
optimal corporate governance system for our Group, taking into
consideration the wishes of our stakeholders.

Sustainability

Corporate governance is attracting growing concern among stakeholders in Japan and overseas and is also an extremely importantpart of corporate management. The roles of the Board of Directors
are not limited to monitoring and supervising management, butalso include formulation and promotion of business strategies.
In formulating Medium-Term Business Plan 2025, we held three
preliminary briefing sessions, where we exchanged opinions anddeepened discussions on the appropriateness of the numericaltargets and the process for achieving them, taking into accountthe advice of outside directors. The plan will now move into theimplementation phase for all Group members, from executive
officers to employees. From time to time, we will evaluate andsupervise the implementation process through progress briefings
with the heads of each business segment.

Management/Business
Strategies

Further Strengthening Our Governance Structure

Message from the
Finance Director

to help supervisors and subordinates deepen their understanding ofeach other’s thinking and improve the development and motivationof subordinates. At present, the program is being implemented at
the Group’s head office but will be gradually expanded to otheroffices and locations.
To ensure that the Group’s officers and employees work witha sense of purpose and vitality, it is important that each and every
one of them fully understands the management approach anddirection of Medium-Term Business Plan 2025 and takes themto heart. I often visit plants, branches, and offices to talk with
employees on a face-to-face basis. My purpose is to deepen
understanding of our Management Philosophy of “remaining
a company that is indispensable to society,” communicate mythoughts, and listen to opinions for reflection in management
policies. My responsibility is to motivate and energize our employees. Ensuring that each and every employee is invigorated in theirwork is the key to the Group’s existence, I believe.

Message fromthe President

We will soon celebrate the 150th anniversary of our founding. We
have been able to survive for so long because of the indomitableand enterprising spirit of our founder, Ichibei Furukawa, inherent
in our DNA, to boldly embrace the challenges of the changing
times. I believe we should pass on this spirit through our Management Philosophy and Action Guidelines. Given our nearly 150-year
history, however, we must acknowledge that some customs andmindsets remain entrenched. There is always a risk of falling into
the status quo and constructionism, but in times of great change,
diversity, and reformation we need to break away from old waysof thinking. With this in mind, we will determine things that need
to be changed and boldly change them. In personnel evaluation,for example, we introduced a challenge point system in addition to
the conventional evaluation items to evaluate how employees havetackled the challenges they have embraced. Meanwhile, the way
people interact in the workplace is changing as workstyles diversify.
Accordingly, we have introduced a one-on-one meeting program

About the Group

Invigorating Human Resources Is the Key to Our ExistenceManagement Philosophy
and Visionchange on the Group’s business and sales, and we plan to
conduct scenario analyses of other segments in the future.
Regarding respect for human rights, given the recent global
emphasis on human rights, companies are facing strong pressure
to address the issue across their entire supply chains. Through ourFinancial Information

Integrated Report 2023

14

Message from the Director in Charge of Finance

From the perspectives of financial strategy andcapital policy, we will work on the two key
objectives of Medium-Term Business Plan 2025:“Achieving ROE of approximately 8%” and“Diminishing cost of capital.”

Koichiro Konno
Director & Senior Executive Officer

Roles as Director in Charge of Finance
On June 29, 2023, I was appointed director in charge of the
Corporate Planning Department, Accounting Department,
Financial Department and Sustainability Promotion Department.
Under Medium-Term Business Plan 2025, our two key objectives for realizing sustainable growth and medium- to long-term
enhancement of corporate value are “Achieving ROE of approximately 8%” and “Diminishing cost of capital.” One of myimportant responsibilities is to achieve these objectives by implementing financial strategies and capital policies. My other majorroles are to explain the importance and necessity of adhering tonumerical targets, both internally and externally, and to promote
understanding and entrenchment of those targets. Our price bookvalue ratio (PBR) at fiscal year-end was 0.5x. By achieving the two
aforementioned objectives, we will get the PBR of 1x or higher.

Pursuing Optimal Capital Structure with Rating
Strategy at Its Core and Reducing Non-Financial Risks
In Medium-Term Business Plan 2025, we have set two main
numerical targets: Debt-to-equity (D/E) ratio in the 0.5x range andinterest-bearing debt/EBITDA ratio in the 3x range. Our intent is tosecure a level of financial soundness that will earn a credit ratingof A– or higher (current rating is BBB+), enabling us to raise fundswith more favorable conditions. Our business performance fluctuates due to changes in the external environment and the unique
circumstances of the Group. To address this, we need to achievefinancial soundness that permits us to raise funds under favorable
conditions irrespective of circumstances. To this end, it is essential
to implement our financial strategy and enhance our corporate
value. To achieve financial soundness, we will steadily implement
the growth strategies in our medium-term business plan andinvest in non-financial capital, including R&D, IP, human capital,and DX, in an effort to reduce non-financial risks.
To diminish the cost of capital, I believe that sustainability
initiatives, such as addressing climate change and respecting
human rights, in addition to investing in non-financial capital, areimportant. Sustainability and finance are inseparable. Accordingly,
my aim is to enhance corporate value through business practices
that take CSR and ESG issues into consideration, complemented
by appropriate information disclosure and dialogue with investors.
As we work to improve ROE, we expect financial leverage todecline temporarily. However, we will pursue an optimal capital
structure by reducing total assets and streamlining and optimizing
equity capital.

Approach to Allocating Operating Cash Flows
Over the three-year period of the plan, we estimate that we will
generate cumulative operating cash flows of ¥40 billion. Of thisamount, we will allocate ¥20 billion to capital investment, which
we consider a top priority for achieving sustainable growth andenhancement of corporate value over the medium to long terms.
Over the past six years, we engaged in a large-scale capital investment program targeting major plants. Now that the program has
run its course, our main focus will be investments in expansion ofplants to increase production, maintenance and renewal of
facilities, and DX.
Of the aforementioned ¥20 billion in capital investment,
we plan to allocate ¥14 billion, or approximately 70%, to the core
Machinery business. We will also adopt a hurdle rate above thecost of capital to make investment decisions
Our second priority is shareholder returns, to which we will
allocate ¥10 billion. Here, we will consider increasing dividends
and paying interim dividends, with ¥7 billion going to dividend
payments and ¥3 billion to share buybacks. Our third priority is.

Summary of Earnings Plan and Capital Policy
Deploy a business portfolio management system that utilizes cost ofcapital to achieve sustainable growth and increase corporate value over the
medium to long terms

Operating profit: Approx. ¥13 billion* Underlying assumption of
ROE: Approx. 8%
exchange rate: ¥135/$

Pursue optimal capital structure with rating strategy at its core
Raise ratings to A– or higher, from BBB+

Debt-to-equity ratio: 0.5x range
Interest-bearing debt/EBITDA ratio: 3x range

Annual dividends of ¥50.00 per share or higher, consider increasing annual
dividends and paying interim dividends
Share buybacks (approximately ¥1 billion each fiscal year)

Consolidated total return on equity: 3% orhigherConduct annual reviews of appropriateness of continued ownership based oncomprehensive judgment of cost of capital and other factors
Continue to disclose the ratio of strategic shareholdings to consolidated net assets

Strategic shareholdings ratio: 35.1%●

Earnings plan

Financial strategy
Shareholder
returns
Reducing strategic
shareholdings

●  
●  

●   

●  

●  

●  

15 FURUKAWA CO., LTD.

(FY2022)* Includes shares deemed to be held

15.9

12

8.9

8

6.2

6
4

13.0 20

6.8
7.6

7.9

7.8

9.0

8.9 8.6
8.9

7.5

3.3

5.5
5.9 5.9 5.7 5.8

10

6.9 6.2

8

2.1

5
0

18.0

15.7

2011

2016

2019

2022

-5
2025 FY.

Ensuring Stable Shareholder Returns

7.9

9.0
6.0

1.9

Capitalinvestment
Consolidated
operatingcash flows¥40

billionbillion¥10 billion+
Maintenance and renewal¥10 billion

Dividends¥7

billionShare buybacks

¥3

5.6

2.0

4.8
3.0

0.9 0.9 0.9 0.9 0.8
2016

2019

2022

1.0

0.5

0.7 0.6

0.02025 FY

holdings of shares deemed to be no longer necessary by sellingthem as appropriate. We will also continue disclosing the ratio ofstrategic shareholdings to consolidated net assets as an indicator of our progress in reducing such shareholdings. The ratio on
March 31, 2023, was 35.1%, down from 51.8% on March 31,
2018. We will continue working to reduce the ratio in a sequential
and ongoing manner. Proceeds from the sale of strategic shareholdings will be used as flexible future capital to meet urgent
capital needs, including investments in M&As and sustainabilityrelated investments centered on decarbonization-related facilities.

Initiatives to Achieve ROE of 8%
To further enhance ROE, as director in charge of finance it isimportant to target improvements in efficiency and productivity,
including by reducing inventories and increasing capacity utilization rates. The Rock Drill Machinery segment, which had been
struggling over the past several years, delivered a V-shaped
recovery in fiscal 2022. To achieve this, we launched a joint projectwith the Corporate Department to reduce the Rock Drill Machinery segment’s inventories as a cross-divisional initiative. Throughthe project, we worked meticulously to identify and address
various issues, ranging from inventory control to factory utilization
rates, working capital, and borrowings. As a result, we reduced
the segment’s global bloated inventories from approximately¥16 billion in fiscal 2020 to around ¥12 billion in fiscal 2021.
Furthermore, we adopted a policy of selection and concentration that includes withdrawing from unprofitable markets, while
executing various reforms, such as establishing a more appropriate
production management system. These efforts led to a recovery of
the Rock Drill Machinery segment, with the operating margin improving from 0.5% in fiscal 2019 to 8.5% in fiscal 2022, and total
asset turnover improving from 0.8 times to 1.0 times. I believethat my role as director in charge of finance is to provide support
and guidance to the business segments using my qualified judgments and strong execution capabilities in times of emergency.
During the period of Medium-Term Business Plan 2025, we
expect our equity-to-asset ratio to increase as we pursue an
optimal capital structure with rating strategy at its core, which will
result in a decrease in financial leverage. To outweigh the impactof this decline, we will aim to achieve ROE of approximately 8%
by further improving profitability and efficiency. We will also strive
to achieve a PBR 1x or higher as soon as possible so we can obtainan appropriate market evaluation.

Financial Information

billionReduction ofinterest-bearing debt

Social3-yearcumulative
total images¥20

Growth investments

5.9 5.7

Environmental

Cash out

6.6

7.4

GovernanceCash in2011

1.4 1.2 1.1

7.6

Sustainability

Allocation of Operating Cash Flows

0.0

1.6

3.0

6.8 6.8

Management/Business
Strategies

Ongoing Reduction of Strategic Shareholdings
With respect to reducing strategic shareholdings, each year we
carefully examine the purpose of our holdings and whether the
benefits and risks associated with each holding are commensuratewith the cost of capital. We also examine the appropriateness ofcontinuing to hold shares. We will strive continuously to reduce

4.0

12.6

Message from the
Finance Director

Our policy is to provide stable and continuous shareholder returns,
with priority on investments to achieve sustainable growth andenhance corporate value over the medium to long terms. In
principle, we plan to pay annual dividends of ¥50.00 or higher per
share and conduct share buybacks of approximately ¥1 billion per
year. As a result, we are targeting a consolidated total return on
equity of 3% or higher. The dividend payout ratio, which we
previously used as a performance indicator, tended to be influenced by profit trends. Accordingly, we have adopted consolidated total return on equity as a new indicator, with the main
objective of delivering stable shareholder returns through a
combination of dividend payments and share buybacks based onshareholders’ equity. We will continue paying stable dividends
that are not affected by our business performance. We will also
continue conducting share buybacks under a policy of repurchasing shares issued via past allocation of new shares to a third party.
We will adopt a flexible approach to repurchased shares, with aview to canceling them in the interests of shareholder returns.

5.0

Message fromthe President

reduction of interest-bearing debt, with a ¥10 billion allocation.
To this end, we aim to establish a solid financial base that enables
us to raise funds without being influenced by financial conditions(Times)

12.0

3.0

(3.6)

Interest-Bearing Debt /EBITDA Ratio
Debt-to-Equity Ratio(Magnification)
15.0

7.7

6.5

Transition of Debt-to-Equity Ratio /Interest-Bearing Debt/EBITDA ratio

About the Group

0

(%)

15

10

2

ROE

Management Philosophy
and Vision

14

Operating Profit

About Integrated Report

Transition of Operating Profit / ROE(Billions of yen)

¥10 billion

Integrated Report 2023

16

Management Strategies

Close-up  Human Resource Strategy
Creating a rewarding company where all employees
can maximize their abilities and create new value

Human Resources Required

Human Resource Development Policy
For the Group to resolve social issues through its business activities andachieve sustainable growth and increase corporate value, it is essential todevelop human resources with a variety of personalities. Commit todeveloping a diverse workforce capable of acting autonomously and willingto embrace the challenge of creating new value.

01

Spirit of challenge
People who like challenges
and want to work globally

In-House Environmental Improvement Policy
The Group is committed to creating comfortable workplaces where diverse
human resources can perform their duties safely and efficiently while maintaining a rewarding and healthy work environment.

Priority Issues for Attracting and Developing Human
Resources
●

●

●

●

03

02

Able to think andact independently

Creative

People who can think andact independently andemphasizecommunication

Introduce a talent management system
Improve employee motivation and work efficiency by ascertaining aptitude of employees and assigning them appropriately

People who love to create
and are interested
in manufacturing

Establish category-specific education policies
Emphasize specialized industry-specific training to improve employees’ capabilities
Actively promote job rotation
Encourage employee career development and diversification and target synergies with a talent management system
Provide training in specialized positions for young employees
Improve retention rates by increasing motivation and understanding of roles required now and in the future

Indicators / Targets

Latest Result

Hire diverse human resources
●

●

●

●

20%

Joined in fiscal
2023

13％

Female manager ratio (consolidated)

3% or higher

As of March 31,
2023

3.33%

Ratio of new hires in management/general positions who are experienced(Company-registered employees)

40% or higher

Joined in fiscal
2022

43.75%

Statutory employment rate
reachedFiscal 2022

2.49%

1,500 hours

Fiscal 2022

843.6 hours

3,600 persons

Fiscal 2022

2,506
persons

Ratio of women among new graduates hired for general positions(Company-registered corporate planning staffs)

Ratio of employees with disabilities (among consolidated subsidiaries subject
to employment ratio system for persons with disabilities)

Develop human resources who are willing to take onchallenges and act autonomously●

Training hours per year (Company-registered employees)●

Number of trainees per year
(Company-registered employees)

Improve work environment●

Ratio of male employees taking childcare leave (Company-registered employees)

80％

Fiscal 2022

72.20%●

Ratio of employees returning to work after childcare leave(Company-registered employees)

100％

Fiscal 2022

87.50%●

Ratio of employees receiving health checkups(Company-registered employees)

100％

Fiscal 2022

99.96%●

Anomaly observation rate

Age 40 and over: Less than 50%

Fiscal 2021

61.20%

Under age 40: Less than 30%

Fiscal 2021

45.40%●

Recognition as Health and Productivity Management Organization

Obtain “White 500” certification

2023

17 FURUKAWA CO., LTD.

—

About Integrated Report

Close-up  DX Strategy

Management Philosophy
and Vision

Promote DX to support accelerating the Group's
growth strategy and operational reforms thatreflects market needs and supports reliable andattractive manufacturing and value creation
Three Pillars of DX Promotion

We established the DX Promotion Committee in April 2023 to formulate andpromote DX strategies at the Groupwide level. The Committee establishes andpromotes DX strategies from the perspectives of product, service, and operational
reform.

Cross-organizational DX development and promotion

Manufacturing

Utilize digital technology to accelerate
sustainable management

Servitization

Build business models
Use 3D data to achieve
and create revenue
overall optimization of
streams throughproduction processes andcustomer value creation
improve productivity●  Engage in manufacturing (monozukuri) and servitization(kotozukuri) to resolve issues faced by customers, society,and the Group and help create value

Message fromthe President

Aim

About the GroupDX Promotion System

・Improve and optimize technologies required to enhance 		
productivity and improve and develop products

Operational reform

・Improve services and create new business model
Promote operational reforms

Productivity
Automation enhancement

Optimization“Marketing-based management” that incorporates
CSV perspectives

Common Challenges in DX Promotion

Opportunities/risks surrounding our businessenvironment for practicing sustainable management
Pursuit of improved
productivity and efficiency
Cost reduction

Frontline labor shortage

Workstyle reforms

Transfer of technology
and know-how

Harsh working
conditions

Fostering DX
humanresources

Servitization(kotozukuri)●

Target overall optimization of manufacturing processes from design to production●

Aim for streamlined manufacturing

Utilize digital technology to create new business model
Enhance value-added services●●

Analyze machine operating data
Provide technical support and proposals

Make Groupwide business improvements and workstyle reforms●●

Expand electronic circulation and workflow
Utilize digital platforms to improve operational efficiency and advance business●

Use external training to develop IT human resources●

Improve digital literacy of staff working on DX●

Flexibly secure IT personnel from outside

Accelerated product development ⇒ Engineering DX●

Improved labor productivity and reduced costs

●

●

●

●

●

●

●

●

Visualization of know-how of skilled workers and establishmentof technology transfer
Profits generated for customers (through increased productivity,
optimization of maintenance operations, and predictive
maintenance) and relationships of trust reinforced
New sources of revenue
Streamlined information management and decision-making andpaperless operations
Efficient sales promotion, service improvement, and visualizationof sales activities
Effective digital technology use and enhanced business management
capabilities due to improved IT/DX literacy of employees
Enhanced problem-solving capabilities through reinforcement of
in-house ICT human resources
Steady promotion of DX through reinforcement of ICT human resources(who are in short supply)

Build common information infrastructure for the Group●

Prepare for cyberattacks and reinforce information security●

Shift to cloud computing and/or environment for basic-operations systems●

Establish information infrastructure indispensable for promoting DX

Integrated Report 2023

18

Financial Information

Infrastructure, security, governance●SocialDevelop and strengthen DX human resources●

Environmental

Operational
reformUtilize 3D data to improve productivity

Expected Outcomes

Governance

Manufacturing(monozukuri)

Medium-Term Business Plan 2025: Measures

Launch Groupwide DX initiatives with view to building
smart factories

Improving
the IT infrastructure

Sustainability

Safety andsecurity

Management/Business
Strategies

Continuation andadvancement ofinitiatives

Labor-saving
efficiency
enhancement

Using digitizationand digital tools
for business improvements
and workstyle reforms

Message from the
Finance Director●  Business Strategies
Net sales

Machinery

Industrial MachineryOperating profit

Operating margin

FY2022

FY2021

Difference

FY2022

FY2021

Difference

FY2022

FY2021

Difference

17,943

17,723

220

1,515

1,396

118

8.4%

7.9%

0.6pt

(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)

Achievements and Future Challenges
In fiscal 2022, we posted year-on-year increases in orders, sales, and operating profit. This was due to receipt of orders
for large projects, such as crushing plants and elevated bridges, as well as increased sales and profit from pumps andenvironmental products. Going forward, we will continue reinforcing our earnings base by expanding our stock business.
Here, we will make full use of various strategic products, such as LK3 (new high-efficiency slurry pump), GEOPUS (crushers),
and SICON® (enclosed hanging conveyors). While integrating our diverse product capabilities, we will also
accelerate cross-functional activities and target business expansion by strengthening our engineering capabilities todevelop infrastructure that helps resolve social issues, such as the SDGs and disaster prevention and mitigation, with theaim of transitioning from a standalone machinery manufacturer.

Medium-Term Business Plan 2025: Basic Strategies and
Key Priorities
Basic strategies
Further strengthen our engineering capabilities and promote
cross-departmental initiatives and DX to move away from beinga standalone machinery manufacturer●

Furukawa Industrial Machinery Systems Co., Ltd.
President & Representative Director

Kazuyoshi Iwama
Business (product) portfolio* Comparison of FY2021 results and FY2025 image

Pumps
Increasing profit due to growth and improved profitability● Material Machinery
Improving profitability and higher profit despite lower growth● Belt Conveyor
Improving growth and higher profit despite flat profitability● Steel structures and Pump equipment
Increasing growth and higher profit (stemming from 		
increased sales) despite declining profitability●

Build a business foundation in the domestic market by pursuing
the SDGs and working on infrastructure development projects
that help resolve social issues (such as disaster prevention andmitigation)●

Key priorities
Strengthen product competitiveness and promote proposalbased sales to win orders
for sectionAuxiliary
plant construction projects
Hydraulicparts
breakers(pumps, material machinery)● Establish earnings base through stock businesses(pumps,material
machinery), including by utilizing customer
Tunneldrill
jumbos management to enhance services
information● Generate demand and promote sales of SICON® enclosed
hanging conveyors●

Hydrauliccrushers

Y: Growth Potential

Blast hole drills

Belt Conveyor

Material Machinery
Pumps

Steel
structures

Pump
equipment

Maintenanceservices

X: Profitability

X: Profitability

Pumps

Material machinery

Contractor business
Increasing trend in construction
for national land resilience, disasterprevention/mitigation measures, etc.
● Growing awareness of belt conveyors
as an alternative to dump trucks fortransporting earth and sand, resulting
in increased inquiries●

Marketenvironment●●

Demand for renewal of aging facilities
Improving energy efficiency and longer
service life

Slurry pumps
Targeting the nonferrous and chemicals
industries (where we anticipate
solid stock business earnings), we will
introduce a strategic machine (newhigh-efficiency slurry pump (LK3)),
aiming to replace other companies’
pumps

●

Main
measures●

Strengthen our sales structure in
Chugoku and Shikoku regions

Pump equipment
Further penetrate East Japan (where
we have a good track record) andexpand market share in West Japan●

Expectedoutcomes

Contribute to customers’ energy
savings through higher efficiency
and lower running costs due tolonger service life

19 FURUKAWA CO., LTD.

●

Demand for renewal of aging facilities

West Japan
Leverage our strategic machines(new screens, crushers (GEOPUS C3
and HPGR)) to tap new markets;
expand market share and increase
stock by encouraging customers to
replace other companies' equipmentwith ours●

Utilize loT technology
Utilize loT technology to formulate
sales proposals for section plants
aimed at productivity improvement
and rationalization, and promote
servitization (kotozukuri)●

Improved productivity of customers'
operations and more stable andreliable operation of customers'
production facilities

Belt conveyors
Win orders for currently planned
projects (new/renewal dam construction, river flood control, tunnel construction, etc.) and solicit increased
inquiries● Emphasize features of SICON®
(enclosed hanging conveyors) as aproblem-solving method of transporting earth and sand; aim for domestic
procurement and production of parts●

Steel structures
Stabilize business profit by attracting
firm orders for steel bridges andincreasing sales of steel segments●

Safe and environmentally friendly
method for transporting earth andsandOperating margin

Difference

FY2022

FY2021

Difference

FY2022

FY2021

Difference

35,75230,910

4,841

3,030

1,117

1,913

8.5%

3.6%

4.9pt

(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)

Achievements and Future Challenges

Medium-Term Business Plan 2025: Basic Strategy and Key
Priorities

President & Representative Director

Masaki Yamaguchi
Business (product) portfolio

Message fromthe President* Comparison of FY2021 results and FY2025 image●

Blast hole drills, hydraulic breakers, hydraulic crushers,
tunnel drill jumbos, auxiliary parts
Increase in profit due to higher growth and profitability●

Maintenance services
Profit to remain mostly unchanged despite sluggish growth 		and profitability

Message from the
Finance Director

Basic strategy
Build an “FRD model” to achieve customer success throughout
the product life cycle
Key priorities● Establish FRD model in Japan
Strengthen Life Cycle Support (LCS) business● Strengthen sales of parts and consumables● Commercialize support program for blast hole drills*● Establish trade-in resale business (tunnel drill jumbos, hydraulic crawler drills)* Blast hole drills:General term for hydraulic/pneumatic crawler drills, downthe-hole drills, and attachment drills

Blast hole drills

Hydraulicbreakers

Auxiliaryparts

Tunnel drill
jumbosHydrauliccrushers

Maintenanceservices
Sustainability

Japan

Y: Growth Potential●

Management/Business
Strategies

Emphasize centralized sales and production
Overseas: Cultivate North American market for large blast hole drills
			and step up development of attachment drills as frontline			machines for developing the Southeast Asian quarry market
			(hydraulic machinery)Japan: Strengthen sales in the quarry market and deepen our			presence in the demolition equipment market through			concentrated sales of small hydraulic crushers and con			
centrated rollout of demolition equipment in the Tokyo			
Metropolitan Area
Production: Reduce costs through centralized production, enhance			quality (to minimize complaints), and shorten lead times

About the GroupIn fiscal 2022, we achieved the highest segment operating profit in the past decade, thanks to our selection and concentration sales strategy and cost reduction efforts, in addition to our ability to promptly pass on increased costs to our product prices. On the other hand, the global shortage of parts led to delays in shipments of some products, with a significant
order backlog carried over to the next fiscal year. In fiscal 2023, political instability especially in Europe will cast a shadow
over overseas markets. In response, we will implement optimal and specific strategies for each region. In North America,
for example, we will increase sales of large blast hole drills and large hydraulic breakers, spearheaded by our new
Western U.S. sales & service facility. In Europe, we will cultivate the market for hydraulic breakers, and in Southeast Asia,
we will target the stone crusher market. In Japan, we will bolster sales of products that contribute to automation andlabor saving while commercializing our customer support program.
Furukawa Rock Drill Co., Ltd.

Management Philosophy
and Vision

Rock Drill MachineryOperating profit

FY2021

About Integrated Report

Net sales
FY2022

X: Profitability

Overseas
North America: Stimulus measures andinfrastructure investments have led tostrong demand for wide-area rentals● Europe: Prolonged invasion of Ukraine andinflation will slow growth, but urban development projects will continue to drive
rental demand● Southeast Asia: Demand expected to shift
from pneumatic to hydraulic machines as
GDP grows in each nation

Life Cycle Support(LCS)●

Marketenvironment

Hydraulic breakers, hydraulic crushers
Cultivate the demolition equipment
market in Tokyo Metropolitan Area (stepup sales of large and super-large breakers)● Concentrate on sales of small hydrauliccrushers (for road general contractors
and aggregate recycling)●Mainmeasures

Achieve highly efficient and safe
operation through automationand mechanization

Promote shift to hydraulic machines in
the Southeast Asian quarry market

Strengthen maintenance service business
Reconsider maintenance system forhydraulic breakers and hydraulic crushers● Reinforce preventive maintenance services
for hydraulic crawler drills and propose
maintenance services for specific purposes●

Develop business model(for customer success)●Hydraulic crawler drills: Leverage
operational support systems to commercialize support programs(intangible services, subscription services)

Ensure customer success by providing
technologies and other solutions
Integrated Report 2023

20

Financial Information

Expectedoutcomes

Develop the Southeast Asian quarry market
Highlight the superiority of Furukawa-branddrifters by promoting attachment drills as frontline machines (Indonesia, Cambodia, etc.)● Launch small and medium-sized hydrauliccrawler drills (currently under development)
targeting Southeast Asian market (2025)●

Establish FRD model in Japan
Strengthen sales of parts● Review pricing of parts● Review overseas distributorship agreements● Improve sales skills in stock businessSocialTunnel-related products
Step up sales of autonomous andlabor-saving products (fully automatic
drill jumbos, rock bolting machine(BOLTINGER), concrete spraying
machines with erectors, etc.)●

Deeply penetrate market for large
machines, which accounts for around
80% of North American market● Concentrate on selling large blast hole drills● Establish base in western region tostrengthen sales to explosive crusher
contractors
Tap the breaker market in Europe● Increase market share in the four countries driving European market (France, United Kingdom,
Italy, and Germany) by strengthening andexpanding our network of dealers for rental equipment

Environmental

Hydraulic crawler drills
Semi-automatic drilling function added●

Japan: Shortage of skilled workers has
led to an increase in demand for services
to improve the skills of workers● Demand for parts in regions where theCompany's machines are operating●

Governance

Shortage of operators due to declining
birth rate and aging population● Demolition machine market: Increasingneed for large-sized, high-impact
equipment● Tunnel projects: Strong demand for automated construction as a safety measure●

Net sales

UNIC MachineryOperating profit

Operating margin

FY2022

FY2021

Difference

FY2022

FY2021

Difference

FY2022

FY2021

Difference

27,961

28,305

(343)

1,547

2,165

(617)

5.5%

7.6%

(2.1)pt(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)

Achievements and Future Challenges
In fiscal 2022, we focused on expanding sales in Japan of mini-crawler cranes, which do not need to be truck-mounted,
as well as ocean cranes. Overseas, we developed dealer networks in Southeast Asia and the Middle East and otherwise
worked to strengthen our sales and technical service capabilities. Going forward, we will expand sales channels formini-crawler cranes in Japan by making proactive proposals for high-value-added products, such as battery-powered cranes,
disassembly equipment, and seven-stage boom machines, while addressing untapped demand. Overseas, we will focus on
increasing sales of large and super-large truck-mounted cranes in Southeast Asia, the Middle East, and Oceania. In addition,
we will promote initiatives for decarbonization, including by addressing UNIC cranes for the electrification of trucks.

Furukawa UNIC Corporation
President & Representative Director

Medium-Term Business Plan 2025: Basic Strategy and Key
Priorities

Kenji Yamakawa

Business (product) portfolio

Basic strategy
Securing stable earnings from domestic sales and expanding
earnings from overseas sales
Japan: Enhance competitiveness by increasing product functionality
and added value and improving service systems
Overseas: Strengthen product, sales, and service technology						 capabilities
Key priorities● Japan:Strengthen competitiveness by increasing the functional					ity and added value of UNIC cranes and UNIC carriers					and expand sales of mini-crawler cranes and ocean
cranes (cranes for ships), which do not depend on trucks					* Comparison of FY2021 results and FY2025 image●

UNIC cranes (Japan and overseas)
Japan: Increase in growth and higher profit (stemming from		
increased sales) despite declining profitability
Overseas: Increase in profit due to higher growth and profitability●●

Mini-crawler cranes (Japan and overseas)
Increase in profit due to higher growth and profitability both inJapan and overseas●

UNIC carriers
Increase in profit due to higher growth and profitability

Overseas: Develop mounted cranes (large models) and new						 mini-crawler cranes, expand sales network, and 							
strengthen sales capabilities of dealers

●

●

●

Reinforce product development system and promote R&D toaddress the electrification of trucks
Promote further automation, quality improvement, and cost
reductions at the Sakura WorksStrengthen our service system

UNIC
carriers

Y: Growth Potential●

Mini-crawler cranes(Overseas)

Mini-crawler cranes(Japan)UNIC cranes(Japan)UNIC cranes(Overseas)

X: Profitability

Japan
Recovery in truck production
Growing interest in decarbonization (adopting electrification trend)● Intensifying price competition between large suppliers● Existence of niche markets (e.g., narrow sites)● Concerns about labor shortages and shrinking market size due
to declining birth rate and aging population●●

Marketenvironment

UNIC cranes, UNIC carriers
Step up direct sales and expand sales of products unique to
UNIC● Adapt to vehicle electrification trend●Mainmeasures

Mini-crawler cranes
Increase sales of high-value-added products (battery-operated
models, disassembled models, etc.) for rental market; narrowtarget customers (electric power companies, general contractors, etc.) to focus on and cultivate new markets●

Ocean cranes
Reinforce contacts with existing customers and develop new
ones

Expectedoutcomes

Overseas
Increasing demand due to infrastructure development
Growing rental market● Growing demand for labor-saving machinery● Multifunctioning of product● Uncertain economic conditions (geopolitical risks, inflation, etc.)●●

Southeast Asia, East Asia, Middle East, Oceania
Increase sales of UNIC cranes (large and super-large machines)
and develop dealer network●

North America
Increase sales of mini-crawler cranes for rental market●

EuropeStrengthen dealer salesforce to restore market share●

Product development
Expand lineup of large and super-large machines●●

Ensure safe, efficient, and energy-saving operations atdiverse sites

Build win–win relationships with dealers in each country
to improve customer satisfaction

21 FURUKAWA CO., LTD.

Operating profit

Operating margin

FY2021

Difference

FY2022

FY2021

Difference(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)

FY2022

FY2021

Difference

111,424

102,995

8,429

1,276

940

336

1.1%

0.9%

0.2pt

Management Philosophy
and Vision

Metals

Net sales
FY2022

Achievements and Future Challenges

About the GroupIn fiscal 2022, we terminated our entrusted copper smelting agreement with Onahama Smelting and Refining Co., Ltd.,effective March 31, 2023, and we are now on track for a fundamental review of our entrusted smelting business, which
has been a priority issue for some time. This business has been affected by market trends in metal prices and exchange
rates, as well as ore-purchasing conditions. Accordingly, earnings have fluctuated wildly, making it difficult todetermine profitability and future prospects. Having strategically downsized the business, we will post a year-on-year
decline in segment sales. However, we are beginning to see improvements in profitability, including a significant
reduction in unprofitable exports.

Furukawa Metals & Resources Co., Ltd.
President & Representative Director

Medium-Term Business Plan 2025: Basic Strategy and
Key Priorities
Basic strategy
Make efforts to optimize the entrusted smelting business

Metals segment profit
and loss infection

VS FY2022
Difference

Key priorities
Pursue profitability and stabilization of the entrusted
		smelting business● Termination of entrusted copper smelting agreement with
		Onahama Smelting and Refining Co., Ltd. (March 31, 2023)● Strategically reduced scale of operations and drastically				 cut unprofitable exports● Obtained clear outlook on fundamental review of				 entrusted smelting business¥111.4 billion¥74.8 billion¥(36.6) billion¥1.2 billion¥0.5 billion¥(0.7) billion[¥0.09 billion][¥0.5 billion])[+¥0.41 billion]

Copper output

70,186 ton

48,592 ton(21,594) ton

Assumption Copper price

8,551 $/mt

8,000$/mt—

Exchange rate

135.5 yen/$

135.0 yen/$—

Net sales●

Operating profit[Operating profit
excluding price effect]* As of the financial results announcement for fiscal 2022, made on May 12, 2023

Net sales

Operating profit

Operating margin

FY2021

Difference

FY2022

FY2021

Difference

6,926

7,271

(345)

500

666

(165)

(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)

FY2022

FY2021

Difference

7.2%

9.2%

(1.9)pt

Achievements and Future Challenges

Basic strategy
Expand business in strategic products to increase earnings
Key priorities
Aluminum nitride ceramics: Increase production capacity to		reinforce sales●

Kenichiro Tamari

Growing demand for heat-dissipating materials forsemiconductor manufacturing equipment, etc.
● Growing market for high-quality laser processing
Marketenvironment ● Semiconductor market recovering moderately (dueto increased demand for 5G communications,sensors, etc.) despite deterioration in the short term●		High-purity metallic arsenic: Establish stable supply system		that reflects market needs as a category leader●

ExpectedoutcomeContribute to enhanced functionality of electronic devices, etc.

SocialMainmeasures

Aluminum nitride ceramics
Swiftly commission facilities to achieve 1.6-fold increase inproduction capacity; consider investments for further production increases; develop distinctive products
Optical components● DOEs: Aim for mass adoption of laser processing● Consolidate operations to stabilize profitability
High-purity metallic arsenic● Maintain our facilities preventively and ensure stableprocurement of raw materials

Optical products: Develop and commercialize special optical			material products; increase sales of diffractive optical elements			(DOEs) for laser processing●●

Integrated Report 2023

22

Financial Information

		Coils: Develop products and expand sales in growth areas to			bolster earnings●

Environmental

Furukawa Denshi Co., Ltd.
President & Representative Director

Medium-Term Business Plan 2025: Basic Strategy and
Key Priorities●

GovernanceIn fiscal 2022, the semiconductor market deteriorated in the second half of the year, causing a decline in sales ofhigh-purity metallic arsenic that could not be offset by other products, resulting in lower segment sales. In addition,
increasing electricity charges had a significant impact on manufacturing costs and profitability. In response, we implemented price rebates and passed on increased costs to the prices of each product. Our challenge for the future is to growthe Electronics segment as a whole, with a particular focus on specific product groups, such as aluminum nitride ceramics
and optical components, which are not significantly affected by semiconductor market conditions. We will also leverage
the strengths of our segment to reinforce our capabilities in product development, manufacturing technology, and sales.

Sustainability

FY2022

Management/Business
Strategies

FY2023(Forecast)Message from the
Finance Director

FY2022Message fromthe President

Tomotoshi Miyamoto●

Electronics

About Integrated Report

Materials

Net sales

Chemicals

Operating profit

Operating margin

FY2022

FY2021

Difference

FY2022

FY2021

Difference

8,454

7,896

557

532

743

(210)

(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)

FY2022

FY2021

Difference

6.3%

9.4%

(3.1)pt

Achievements and Future Challenges
In fiscal 2022, sales of cuprous oxide increased on the back of a recovery in demand for ship-bottom paints, a major
application for that product. On the other hand, segment operating profit declined due to weak demand for cupric oxidefor electronic materials, the main application for that product, as well as delays in passing on increased costs of raw
materials to our product prices. Among existing products, we will step up efforts to differentiate our sulfuric acid offerings and expand facilities to meet recovery in demand for cupric oxide, which will lead to increased earnings. Meanwhile,
sales of metallic copper powder, a newly developed product, are far behind our targets due to sluggish demand for
conductive applications, but we will continue expanding sales channels by developing new applications and other means.

Furukawa Chemicals Co., Ltd.
President & Representative Director

Medium-Term Business Plan 2025: Basic Strategy and
Key Priorities

Shin Imai

Basic strategy
Increase earnings from existing products and nurture andexpand newly developed products

Domestic market for chemical products generally
shrinking due to population decline● Growing demand for batteries and related electronic compoMarket
environment
nents due to shift to EVs and automation of automobiles, etc.
● Increasing demand for servers, etc., due to advancesin networks stemming from ICT innovation●●

Key priorities
Existing products● Sulfuric acid: Strengthen differentiation by emphasizing
		 high-quality sulfuric acid
● Cupric oxide: Capacity enhancement to increase sales● Newly developed products● Metallic copper powder: Expand sales channels by 				 developing new applications●

Main
measures

Sulfuric acid
Strengthen differentiation by emphasizing high-quality
sulfuric acid for battery applications for which demand is growing
Cupric oxide● Increase production capacity and expand sales to address
rising demand for packaged substrates used in servers, etc.
Metallic copper powder● Shorten the process from sample rollout to formal adoption
and develop applications other than conductive applications(such as multilayer ceramic capacitors (MLCCs)) to expand
sales channels

ExpectedoutcomeHelp realize an environmentally friendly and prosperous
society●

Net sales

Real Estate

Operating profit

Operating margin

FY2022

FY2021

Difference

FY2022

FY2021

Difference

FY2022

FY2021

Difference

2,056

2,115

(58)

835

743

92

40.6%

35.1%

5.5pt

(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)

Medium-Term Business Plan 2025: Basic Strategy and Key Priority
Basic strategy
Secure stable earnings from the Muromachi Furukawa Mitsui Building and effectively utilize other real estate holdings, including site offormer Furukawa Osaka Building●

Key priority
Promote lease business using the site of the former Furukawa Osaka Building.

●

TOPICS

Plan for Site of the Former Furukawa Osaka
Building
Promote lease business using the site of the former
Furukawa Osaka Building
We have been considering our future plan for the site of the former
Furukawa Osaka Building, which was a key priority in our effort toeffectively utilize our real estate holdings. At its meeting held on May
29, 2023, the Board of Directors resolved to transfer co-ownershipinterest of the site of the former Furukawa Osaka Building and otherland (transfer date: August 25, 2023). The Company plans to use theproceeds from the sales to lease a hotel and some residential units
scheduled to be built on the site (scheduled for completion in thespring of 2027).
23 FURUKAWA CO., LTD.

About Integrated Report

TOPICSRock Drill Machinery(3) The robot for installing steel arch supports- Minister of Land, Infrastructure, Transport and Tourism
		Award*4 at the 10th Robot Award
		 The robot for installing steel arch supports (jointly devel		 oped with Maeda Corporation and Mac Co., Ltd.) has
		 completely mechanized the dangerous and demanding
		 work of steel support erection and concrete spraying at
		 the face. It enables two people to perform work		 previously requiring six people, thereby improving		 productivity by		 reducing manpower		 and shortening the		construction
cycle while signifi				cantly reducing therisk of on-site accidents.
		

Message from the
Finance Director
Management/Business
Strategies

Contributing to infrastructure development withproducts that address social issues
In the Rock Drill Machinery segment, we will continue fostering
the development of social infrastructure by providing products
related to mountain tunnel construction that not only improvesafety and manpower saving at construction sites throughautomation and mechanization but also resolve various social
issues related to national land resilience, disaster prevention
and mitigation, the SDGs, and Japan’s declining workforce.

Sustainability
Governance*1 Company research*2 Awarded in June 2022 by the Japan Construction Machinery and 		Construction Association*3 Awarded in August 2022 by the Japan Institute of Country-ology andEngineering*4 Awarded in October 2022 by the Ministry of Economy, Trade andIndustry (secretary); Japan Machinery Federation (secretary); Ministry ofInternal Affairs and Communications; Ministry of Education, Culture,
Sports, Science and Technology; Ministry of Health, Labour andWelfare; Ministry of Agriculture, Forestry and Fisheries; and Ministry ofLand, Infrastructure, Transport and Tourism

Environmental

Please take a look at the video below introducing our tunnelrelated machines used at mountain tunnel construction sites.
https://www.youtube.com/watch?v=1tDy0vfI2So

Social(1) BOLTINGER (rock bolting robot)- 2022 Japan Construction Machinery and Construction
		Award*2- 24th Infrastructure Technology Development Award*3- Minister of Land, Infrastructure, Transport and Tourism
		Award*4 at the 10th Robot Award
Rock bolting is a difficult process that is traditionally performed manually at high elevations and in close proximity to
the rock face. Equipped with a six-meter joint bolt placing
device, BOLTINGER (jointly developed with Taisei Corporation) is a rock bolting robot that completely mechanizes therock bolting process, thus
dramatically improving
safety and workability andreducing labor.

Message fromthe PresidentHigh praise received for mountain tunnel construction-related machines products improved safety andease of construction
In addition to fully automatic drill jumbos, we develop andprovide tunnel construction-related products that improve
the safety and workability of the construction process. These
products are highly valued by customers and received many
awards for their superior technology in fiscal 2022.

(2) Tunnel drill jumbo using remote technology- 2022 Japan Construction Machinery and Construction Award*2
		 Japan’s first tunnel drill jumbo using remote technology
		 (jointly developed with HAZAMA ANDO CORPORATION
		 and MAC co., ltd.) enables unmanned construction in		 the face of a tunnel by remotely operating the drill from		 a central control room in the pit. Consolidating and		 analyzing construction data in the central control room		 also helps streamline blasting oper ations. Using remote		 technology to		 perform ICT-based
		 construction has been		 highly evaluated for		 improving safety and		workability.

About the Group

Fully automatic drill jumbos: Solving problems at the
cutting edge of tunnel construction
In Japan, which has many mountainous areas, tunnel drill
jumbos made by the Rock Drill Machinery segment are used
at construction sites for mountain tunnels, which function associal infrastructure connecting various regions in the nation.
We have an 80% domestic market share*1 for tunnel drill
jumbos. This type of construction involves drilling holes in thehard bedrock that forms the tunnel cross section, then loading and detonating explosives. In recent years, cut-and-coverconstruction has presented issues, such as worker safety andlabor shortage due to the aging of skilled workers. The needto pass on skills and know-how and improve productivity
through enhanced efficiency and precision is also a challenge.
In particular, the drilling process, which accounts for roughly
60% of all blasting operations, is complicated and relies on
the intuition of experienced and skilled workers, leading tocalls for greater automation and productivity improvement.
To resolve these issues, we developed the ROBOROCK® fully
automatic drill jumbo. Its drilling process is fully automatedand computer-controlled for optimal, highly accurate drilling.
In addition to improving productivity, it enables labor savingsat hazardous work sites and helps ensure worker safety. Its
technology is registered in the New Technology Information
System (NETIS), a databaseowned by the Ministry ofLand, Infrastructure, Transport and Tourism, and thus
scores additional points forconstruction performance
evaluation and in thegeneral evaluation bidding
process.

Management Philosophy
and Vision

Evolving Products for Mountain Tunnel Construction—Using automation and mechanization to improve site safety and workability and to save labor

Tunnel Drill Jumbo video

Financial Information

Integrated Report 2023

24

Sustainability in the Furukawa Company Group
Ideal Image for Sustainability 2025
In 2016, the Furukawa Company Group formulated “Ideal Image for CSR 2025” in order to think about what sort of CSR activities should
be conducted once Vision for 2025 “FURUKAWA Power & Passion 150“ has been achieved. In May 2023, we changed the name to “Ideal
Image for Sustainability 2025.”
We are promoting activities to achieve the ideal image so we can remain a company that is indispensable to and trusted by society.

Ideal Image for Sustainability 2025 (revised in May 2023)■ Promote environmental and safety activities
Reduce environmental impact, promote environmental protection and biodiversity preservation, publicly disclose results of environmental andsafety activities, achieve zero workplace accidents and disasters, ensure stable maintenance and management of mine drainage treatment
facilities and loading docks at suspended or abandoned mines, and conduct technology transfers■ Improve the brand strengths of Furukawa products and achieve top ranking in product categories■ Expand and strengthen human resources
Build a rewarding company by providing comfortable work environments in which individual employees can maximize their abilities andcreate new value■ Leverage sustainability activities to pursue QCD* and sustainably make and sell products that are trusted by customers■ Promote sustainability initiatives
Expand enterprise risk management system, promote sustainability and climate change-related disclosure,manage Materialities (Key Issues) targets related to sustainability initiatives,
engage in environmental and human rights due diligence, and support measures for carbon neutrality■ Ensure that all officers and employees are keenly aware of compliance as it applies to the international community* QCD: Quality, cost, and delivery

Sustainability Promotion Framework
In December 2021, the Group reorganized its CSR Promotion
Meeting, established in Furukawa Co., Ltd., to promote CSR
initiatives, and renamed it the Sustainability Promotion Meeting
to strengthen its sustainability initiatives. Since then, the Grouphas worked actively to resolve issues related to sustainability byclarifying its responsibilities to stakeholders and identifying priority
issues that need to be addressed to realize “The Furukawa Company Group Basic Policy on Sustainability Initiatives.”
The Sustainability Promotion Meeting convenes annually, inprinciple, with the President & Representative Director serving as
Chairperson and the Sustainability Promotion Department as Secretariat. The Meeting deliberates on a variety of sustainability and
CSR issues, including formulation of basic policy and action plans
for the Group’s sustainability and CSR activities, establishment of apromotion framework, verification and evaluation of the status ofactivities, and education and public information measures.
Other serving members of the Sustainability Promotion Meetingare the Company’s directors and the presidents of core operatingcompanies, as well as the chairperson of the Compliance Committee, the Environmental & Safety Management Committee, andthe Quality Assurance Committee, which are the Company's organizations, together with the heads of the Sustainability Promotion
Department, Human Resources & General Affairs Department,
and Purchasing Department. Based on deliberations and suggestions made at the Meeting, we will develop a PDCA cycle ofplanning, execution, evaluation, and improvement in cooperation
with relevant Group companies and business divisions that serveas executive departments for sustainability and CSR activities.
In cooperation with the Risk Management Committee, whichis engaged in Groupwide risk management, we will develop asystem to reduce risks and maximize opportunities related to theGroup’s business.
25 FURUKAWA CO., LTD.

Sustainability Promotion Structure
Board of Directors /President & Representative Director
Instruction

Reporting

Sustainability Promotion Meeting
Comprehensive deliberations onsustainability and CSR

Risk Management Committee
Interaction

Comprehensive deliberations
on enterprise risk

Sustainability Promotion Department(Secretariat)

Compliance Committee
Environmental & Safety
Management Committee
Quality Assurance Committee
Sustainability Promotion Department
Human Resources &General Affairs Department
Purchasing Department
Instruction

Reporting Interaction

Implementation Bodies (PDCA Cycle)
Furukawa Co., Ltd. Relevant departmentsCore Operating
Companies

Furukawa Industrial Machinery Furukawa Metals & Resources
Systems Co., Ltd.
Co., Ltd.
Furukawa Rock Drill Co., Ltd. Furukawa Denshi Co., Ltd.
Furukawa UNIC Corporation
Furukawa Chemicals Co., Ltd.

About Integrated Report1

Materialities (Key Issues) on Sustainability Initiatives

Message fromthe President

Proactive: CSV Issues
Materialities on resolving “social issues” through our business

About the GroupTo further endeavor to make its Management Philosophy a reality and resolve social issues, the Furukawa Company Group has reviewed
the CSR priority issues identified in 2013, and at a meeting of the Board of Directors held in November 2022, resolved to identify 10 items ofMateriality (Key Issues) based on “The Furukawa Company Group Basic Policy on Sustainability Initiatives” established in December 2021, as
follows. We are also considering targets and other measures to address those items.
By steadily implementing the PDCA cycle in relation to any measures determined, we will work hard to “increase the value of the
Furukawa brand through ‘marketing-based management’ that incorporates CSV perspectives” and “increase corporate value byemphasizing business practices that reflect CSR/ESG issues recognized and to be solved by the Group,” as is clearly stated in Vision for 2025.
In the process, we will aim to achieve sustainable growth for society and the Group and increase corporate value over the medium to long term.

Management Philosophy
and Vision

Identification of Materialities (Key Issues)

Main Related SDGs

Provide environmentally friendly products, technologies, and services
Contribute to the resolution of customer issues● Contribute to the creation of a safe and comfortable society, including infrastructure development●●

E(Environmental)●●

Message from the
Finance Director

Defensive: CSR/ESG issues
Materialities on establishing a robust corporate foundation for growth

Main Related SDGs

Promote climate change countermeasures in business activities
Promote biodiversity preservation activities

Management/Business
Strategies

Develop safe and rewarding work environments that take health into consideration
Recruit and develop diverse human resources● Promote management that respects human rights●

S(Social)●G(Governance)●

Develop an enterprise risk management system
Ensure thorough compliance

Sustainability

2●

Background

Environmental

3

and resolve social issues. To this end, we formulated “The Furukawa Company Group Basic Policy on Sustainability Initiatives”
on December 1, 2021, and reorganized our CSR promotion
framework into a sustainability promotion framework. In addition,
we reviewed our existing CSR priorities and identified sustainabilityrelated Materialities that we should focus on as a matter ofpriority.

GovernanceIn 2013, when it launched a framework for promoting CSR, theGroup identified CSR priority issues, established related targets,
and worked to achieve those targets. In recent years, however,measures to address climate change and achieve the SDGs havecome to be viewed as increasingly important. Accordingly, theGroup decided to review its existing understanding of the issues
and work harder to make its Management Philosophy a reality

Process for Identifying Materialities
Step 1

Step 2

Step 3

Select social issues

Understand importance

Identify Materialities
Social●Identified issues that are important to 		the Group and various stakeholders frommedium- to long-term perspectives●

Selected 50 candidates for Materialities●●

Conducted in-house surveys related to the 50
candidates selected and assessed importance in relation to issues
Aggregated and scored the results
Consolidated the 50 candidates into 10
items of Materiality (Key Issues), taking
into consideration social demands●

Passed resolutions concerning theidentification of Materialities at a meetingof the Management Council held in
October 2022 and an extraordinary
meeting of the Board of Directors held on
November 11, 2022

Integrated Report 2023

Financial Information[Reference]GRI Standards, ISO 26000, indicators andtargets for the SDGs, trends at other companies,
etc.

●

26

Medium-Term Targets for Sustainability-Related Organizations (FY2023–2025)
Medium-Term Sustainability Targets
Organization

Medium-term targets (FY2023–2025)

Related SDGs

Promote improved environmental performance (CO2, water resources, waste, andchemical substances) to achieve Fourth Medium-Term Reduction Targets● Promote initiatives to achieve carbon neutrality● Promote biodiversity preservation activities (greening, maintenance of Companyowned forests, preservation of ecosystems, regeneration of flora and fauna, etc.)● Strengthen efforts to achieve accident- and disaster-free operations● Meticulously manage suspended or abandoned mines●

Environmental & Safety
Management
Committee[Groupwide] Step up activities to raise awareness about quality[Operating companies in the Machinery business] Reduce number/cost of complaints● [Operating companies in the Machinery business] Establish and continuously improve
the quality assurance system (pursue activities in line with quality roadmap)● [Operating companies in the Materials business] Strengthen quality assurance system(review existing methods and consider use of new ones)●

Quality
Assurance
Committee

Human
Resources &GeneralAffairs
Department●●

Develop and retain talented human resources●

Improve internal working environments●

Promote diversity

Procure materials and parts from suppliers in consideration of the SDGs
Continue evaluating suppliers, including from the perspective of their sustainability initiatives● Continue comprehensive supplier evaluation (QCD + CSR)
● Continue Groupwide CSR procurement activities●

Purchasing
Department●

Expand and enhance enterprise risk management system
Disclose information on activities related to sustainability and climate change● Monitor and manage measures and targets for Materialities related to sustainability initiatives● Implement environmental and human rights due diligence measures● Promote GHG reduction plan related to carbon neutrality●

Sustainability
Promotion
Department●

Step up measures to prevent compliance violations
Conduct compliance awareness surveys● Respond proactively to the Act on the Protection of Personal Information(including guidelines) and the Whistleblower Protection Law● Respond appropriately to subcontractors and other business partners● Establish a compliance system for overseas subsidiaries●●

Compliance
Committee

Relationships with Stakeholders
In the course of strengthening our sustainability initiatives and implementing our Management Philosophy, we have identified
our stakeholders as follows: customers, business partners, shareholders and other investors, employees, local communities,
and the global environment. Moreover, we aim to build relationships of trust and accordingly maximize corporate value by
engaging in appropriate communications that involve clearly conveying our responsibilities to each group of stakeholders.
Stakeholder

Responsibilities

Opportunities and Means for Communication

Customers

We shall provide customers with safe, high-quality products and services in order to increase satisfaction levels.

Service activities, sales activities, websites, exhibitions, meetings to
exchange views with distributors and agencies, etc.

Business
partners

We shall build and maintain mutually beneficial relationships conducive to harmonious coexistence through stableprocurement activities based on the principles of fairness
and economic rationality.

Procurement activities and information exchanges, CSR promotion
guideline surveys, technical guidance, production briefings, etc.

Shareholders
and otherinvestors

We shall work to maximize corporate value through communications focusing on timely and appropriate information
disclosure and IR activities.

Results briefings, shareholders’ meetings, IR meetings with institutional
investors and analysts, factory tours, integrated reports and other such IR
tools, information disclosure on the website, distribution of IR news, etc.

Employees

We shall create safe, healthy, and motivating workplacesin which our diversified human resources can excel while
adopting appropriate evaluation standards and fair treatment.

Employment grade-specific training, personnel performance evaluation and target evaluation system, self-assessment system, discussions between management and labor unions, employee surveys,
internal reporting system, etc.

Local
communities

We shall build and maintain favorable relationships of trustContributions to local communities through business, participation
by pursuing social contribution activities aimed at harmoin volunteer activities, etc.
nious coexistence with local communities.

Globalenvironment

We shall protect biodiversity by developing environmentallyfriendly technologies and products while minimizing the environmental impact of our activities through savings of energy
and resources and reduction of waste.

27 FURUKAWA CO., LTD.

Cooperation with groups and NPOs that engage in tree planting activities, ecosystem restoration and recovery activities with local residents,
disclosure of environmental and other data in sustainability reports,etc.

About Integrated Report

The Group will generate “corporate value” by providing infrastructure, products, technologies, and services that help resolve social issues,
while at the same time striving to create “social value.” Of the 17 SDGs, we are focusing particular attention on achieving Goal 11 (“Make cities
and human settlements inclusive, safe, resilient and sustainable”) and Goal 9 (“Build resilient infrastructure, promote inclusive and sustainableindustrialization and foster innovation”). We will also strive to create “social value” by building social infrastructure as stated in “The Furukawa
Company Group’s Value Creation Process” (please see pages 7–8), while realizing a safe, environmentally friendly, and prosperous society.

The Furukawa Company Group practices “marketing-based management” that incorporates CSV perspectives and creates “social value” byimproving social infrastructure and realizing a safe, environmentally friendly, and prosperous society. In these ways, we will help achieve the
SDGs.

About the GroupDeploying “Marketing-Based Management” That Incorporates CSV Perspectives to Address the SDGs

Management Philosophy
and Vision

Resolving Social Issues through Business

SDGs Contribution Targets by Segment

Industrial
Machinery○
Pumps

Belt conveyors

Steel bridges and structures

Tunnel drill
jumbosHydrauliccrawler drills

Hydrauliccrushers

◎

◎

○

○

◎

◎

○

○

◎

◎

○

◎

◎

○

○

◎

◎

○

○

◎

◎

○

Ocean cranes

Sustainability

MetalsMini-crawler
cranes○Management/Business
Strategies

UNIC cranes◎

Message from the
Finance Director

Rock Drill
Machinery

Message fromthe President

Segment

UNIC
Machinery

SDGs with High Contribution Levels ( ◎ : Especially Important; 〇 : Important)

Main Products, Technologies,
and Services

High-purity metallic arsenide Coils

Aluminum nitride ceramics◎
Aluminum sulphate Cuprous oxide

Industrial
Machinery

Our belt conveyors, featuring superior
efficiency, safety, and environmental
performance, contribute to the development of social infrastructure.

SocialBelt Conveyor video

Financial Information

In the Industrial Machinery segment, we develop belt conveyors
that help resolve social issues related to national land resilience,disaster prevention and mitigation, and the like. Here, we leverage our experience and conveyor-related technologies, cultivatedthrough mine development, as well as our engineering capabilities
in the steel structure business, to handle the design, construction,and installation of steel structures suited to each site in an integrated manner.
Compared with dump trucks, which are a common means oftransporting earth and sand, belt conveyors are highly regarded
because they enable reduced manpower, generate almost no CO2emissions, and allow earth and sand to be transported safely andreliably. As a result, they have been used more and more in recent
years. With our SICON® enclosed hanging belt conveyor, earth,sand, and other materials are enclosed in bags and suspended
like a monorail for transportation. It is used at sites that requireconsideration of the surrounding environment, such as residential
areas and for transporting earth and sand on steep slopes (riverflood-control projects, tunnel construction, dam construction,etc.) because it suppresses spills, dust, noise, and vibration, and its
conveying line can easily be routed across a variety of terrains.
Please watch the video introducing the excellent characteristicsof the Furukawa Company Group’s belt conveyors and examples
of solutions to social issues in earth and sand conveying.

Environmental

Sulfuric acid

GovernanceChemicalsElectronics

Electrolytic copper

Our belt conveyors
help resolve social
issuesIntegrated Report 2023

28

G: Governance

Message from Chairman of the Board of Directors

I was appointed President & Representative Director
in June 2013 and Chairman & Representative Director
in June 2021. During these period, I have also served as
Chairman of the Board of Directors since June 2017.
In 2015, when the Furukawa Company Group celebrated its 140th anniversary, we established our new Management Philosophy and drew up our first long-term management vision (Vision for 2025), outlining what we want to
be in 10 years when we celebrate our 150th anniversary.
Backcasting from this, we introduced a framework forformulating medium-term business plans, with a roadmap
every three years centered on action plans and PDCA
progress management for each business and product.
These initiatives align closely with the basic andsupplementary principles set forth in “Responsibilitiesof the Board” in Japan’s Corporate Governance Code,released in May 2015.
We have now completed Phase 1 (Medium-TermBusiness Plan 2019) and Phase 2 (Medium-Term Business
Policy 2022) of Vision for 2025, and this year, fiscal 2023,
marks the first year of Phase 3 (Medium-Term Business
Plan 2025). Over the next three years, we will make significant progress in our core Machinery business and develop
new products in our Materials business in order to achieve
the goals of the new plan while keeping Vision for 2025
in mind. To this end, the Board of Directors will fulfill its
oversight responsibility to ensure that we achieve the goalsof our earnings plan and capital policy while implementing
sustainability-related initiatives and a wide range of othernon-financial measures.
As the decision-making and oversight body for mattersrelated to the entire Group, the Board of Directors discusses medium- and long-term management strategies
and other matters, works to accelerate decision-making,and ensures appropriate oversight. As Chairman of theBoard of Directors, I oversee efforts to achieve sustainablegrowth and enhance medium- to long-term corporate
value. Here, I leverage the insights of outside directors,
who have objective and diverse viewpoints, to invigorate
discussions.
When formulating Medium-Term Business Plan 2025,
the Board of Directors extensively discussed and incorporated new non-financial strategies, in addition to confirming business strategies. We spent significant time discussing sustainability and capital policy, including the reductionof strategic shareholdings. In evaluating the effectivenessof the Board of Directors, we reaffirmed the importance ofmore free, vigorous, and constructive discussion, including
issues raised by outside directors, when addressing specificmanagement strategies and plans. Going forward, we
intend to further revitalize the Board.

29 FURUKAWA CO., LTD.

We will also focus on strengthening our governancestructure and enhancing the functions of the Board of
Directors to create an environment for optimal risk–
reward decision-making and improve the effectiveness of
the Board. As Chairman of the Board of Directors, I will
manage the Board with these intentions always in mind.
I will also strive to realize Vision for 2025 and look beyond
it to achieve sustainable growth and enhance medium- tolong-term corporate value.
Last, I would like to address the reduction of strategic
shareholdings, a key issue in the governance of theCompany. We have a history of investing in affiliatedcompanies and owning real estate and shares related tovarious businesses under prewar zaibatsu (conglomerate)
management. We have also held a relatively large numberof shares even after the postwar dissolution of the zaibatsu.
Following a 2018 revision of the Corporate Governance
Code regarding the reduction of strategic shareholdings,
the Board of Directors introduced a framework for verifying the appropriateness of maintaining holdings based on
a comprehensive review of various factors, including thecost of capital, and has been working to reduce its strategic shareholdings since fiscal 2018. As a result, we soldshares in 16 companies over the past five years, reducing
the ratio of strategic shareholdings to consolidated net
assets from 51.8% on March 31, 2018, to 35.1%* on
March 31, 2023. However, I acknowledge that is not
sufficient. Going forward, the Board of Directors willcontinue to conduct annual reviews of the Company’s
strategic shareholdings and strive to reduce holdings ofshares deemed to be no longer necessary by selling them.
We will also continue disclosing the ratio of strategic
shareholdings to consolidated net assets as an indicator of
our progress in reducing such shareholdings.
* Includes 5.5% deemed to be held in retirement benefit trusts

As Chairman of the Board of Directors‘ I will continue
working to improve the quality of the Board of Directors’
meeting. To this end, I sincerely ask for the ongoingsupport from all stakeholders.

Naohisa Miyakawa
Chairman of the Board of Directors
Chairman &Representative Director

About Integrated Report

The Board consists of nine members as of June 29, 2023, including three Outside Directors.

Overview of Corporate Governance System and Reasonsfor Its Adoption

Title

Attendance
rate

Tatsuya Tejima

5

5

100%

Yoichi Mukae

5

5

100%

Kazumi Nishino

5

5

100%

Member (Chairman &Representative Director)

Naohisa Miyakawa

5

5

100%

Member (President &Representative Director)

Minoru Nakatogawa

5

5

100%

Sustainability

Corporate Governance System
Shareholders’ Meeting
Election and Dismissal

Election and Dismissal

Board of Directors

AuditsAdvisory

Election and Dismissal

Audit & Supervisory Board

four members(including two outside members)

Cooperation

Accounting Auditor

Governancenine directors(including three outside directors)
Reports

Nomination &Remuneration Committee

Oversees

Reports

Reports

AuditsAuditsCooperation

Environmental

Reports

Management Council

Internal Audit Department

Accounting Dept., others
Sustainability Promotion
Meeting

Risk Management
Committee

Executive Officers(9 persons)SocialManagement Committee

Cooperation＜Internal Control Division＞＜Management＞
Representative Director

Management/Business
Strategies

Chairman(Outside Director)
Member(Outside Director)
Member(Outside Director)

Message from the
Finance Director

Directors and Board of Directors
The Board of Directors, chaired by Chairman & Representative
Director Naohisa Miyakawa, holds regular meetings once amonth, and extraordinary meetings as necessary and supervises
the business execution of the entire Group as a supervising body.

No. ofNo. ofmeetings meetings
attended

Name

Message fromthe President

Furukawa Co., Ltd. employs a company system with a Board of
Directors and an Audit & Supervisory Board to supervise businessexecution. In addition, we have appointed Outside Directors toensure the validity of decision-making and the objectivity andtransparency of management. The Audit & Supervisory Board
Members are managers of other companies and persons withknowledge of financial accounting, who use their specialized
knowledge and experience to give advice to management andcheck the status of operations. We consider that management
oversight is functioning effectively under the current system.

About the Group

Nomination & Remuneration Committee
The Nomination & Remuneration Committee serves as an optional
advisory body to the Board of Directors. It receives requests foradvice from the Board of Directors regarding candidates for Directors and Audit & Supervisory Board Members, as well as selection
and dismissal of Representative Directors and remuneration for
Directors, then deliberates and reports as necessary.
The majority of the Committee’s members are Outside Independent Directors, and the Committee is chaired by an Outside
Independent Director, thereby ensuring independence.
The Committee met five times between April 2022 and March
2023. It consists of the following five members.

Management Philosophy
and Vision

Basic Approach
The Furukawa Company Group maintains fundamental policies
regarding corporate governance with respect to heightening managerial transparency, building an effective managerial framework
through ongoing efforts to transform its corporate structure,
increasing its corporate value by generating consistent profits, andcontributing to its shareholders and other stakeholders.

AuditsFinancial Information

Relevant Company divisions/departments/offices and Group companies

Integrated Report 2023

30

Executive Officer System
The Company employs an Executive Officer System, whichfacilitates quicker decision-making, and defined responsibilities
in terms of keeping management supervisory functions separate
from executive functions. Executive Officers perform their tasks
according to business plans determined by the Board of Directors,
and report the status of business execution as appropriate to theBoard of Directors and the Management Committee. The Company has nine Executive Officers as of June 29, 2023, including four
serving concurrently as Directors.
Management Council
The Management Council consists of all internal Directors of theCompany and is chaired by Minoru Nakatogawa, President &Representative Director. The Council makes decisions on basic
management policies, strategic planning, and important mattersof the Furukawa Company Group. Internal Audit & Supervisory
Board Members may attend Management Council meetings andexpress their opinions.
Important matters pertaining to each company in the Group are
submitted to the Board of Directors after decisions of the respective Group companies have been made. Of the important matterssubmitted to the Management Council, those of managerial
importance in terms of financial magnitude and content are also
submitted to the Board of Directors for decision.
Management Committee
The Management Committee consists of internal Directors andinternal Audit & Supervisory Board Members, as well as Executive
Officers, general managers of business divisions, managers of
departments not attached to business divisions (excluding generalmanager of the Secretary Department), and the presidents ofcore operating companies (Furukawa Industrial Machinery Systems
Co., Ltd., Furukawa Rock Drill Co., Ltd., Furukawa UNIC Corporation,
Furukawa Metals & Resources Co., Ltd., Furukawa Denshi Co.,
Ltd., and Furukawa Chemicals Co., Ltd.). The Committee ischaired by Minoru Nakatogawa, President & Representative Director,
and meets monthly. The Management Committee reports on theexecution of business by the Company and its core operatingcompanies, examines them, and gives instructions.
Audit & Supervisory Board and Its Members
The Audit & Supervisory Board consists of four members (twofull-time and two outside) as of June 29, 2023, and is chaired by
Kazuo Inoue, a full-time member. It meets from time to time tomake decisions on audit policies, business decisions, methods ofinvestigating the status of assets, and other matters related to the
execution of duties by Audit & Supervisory Board Members.
The Company has appointed one supplementary Audit &Supervisory Board Member (pursuant to Article 329, Paragraph 3of the Companies Act) in case the number of members
stipulated in laws and regulations falls short. The appointmentof supplementary Audit & Supervisory Board Members shall beeffective until the beginning of the Annual Shareholders’ Meeting
relating to the last fiscal year ending within four (4) years after
the appointment’s resolution. In the event that a supplementary
member assumes office as an Audit & Supervisory Board Member,the term of office shall be until the expiration of the term of theretiring member.
In accordance with the audit policy determined by the Audit &Supervisory Board, Audit & Supervisory Board Members attend
meetings of the Board of Directors, Management Council, and other
31 FURUKAWA CO., LTD.

important bodies. At those meetings, Audit & Supervisory Board
Members audit the execution of duties by Directors by listening tobusiness reports from Directors and others, and by investigating
business offices and subsidiaries.
Status of Internal Audits and Audits by the Accounting
Auditor and Audit & Supervisory Board Members
We established the Internal Audit Department as an internal
auditing organization. As of June 29, 2023, the Department has
five members including the Internal Audit Department Manager,
who conduct audits of the status of management and businessexecution across all management activities of the Group. Througha system in which the Internal Audit Department reports regularly(once a year) to the Board of Directors, we ensure cooperation
among Directors and Audit & Supervisory Board Members. Since
Audit & Supervisory Board Members also attend the Board of
Directors’ meetings, in principle, the Department further ensurescollaboration by separately reporting to Audit & Supervisory Board
Members as necessary on matters that do not overlap in content
but are not regularly reported to the Audit & Supervisory Board.
The Company has appointed Ernst & Young ShinNihon LLC as
its accounting auditor. There is no conflict of interest between the
Company and the accounting auditor or the managing partnersof the accounting auditor who engage in audits of the Company. Audit & Supervisory Board Members work closely with theaccounting auditor as part of the Company’s audit policy. At the
beginning of each fiscal year, the Company receives an explanation of the annual audit plan from the accounting auditor andprepares an audit plan for Audit & Supervisory Board Members.
Audit & Supervisory Board Members also receive explanationsof the audit results from the accounting auditor regarding thesettlement of accounts for the fiscal year and request reports fromtime to time. In addition, they work closely with the Internal Audit
Department, receiving reports on the results of internal audits.
The Internal Audit Department and the accounting auditor also
exchange opinions and information as needed.
Evaluating the Effectiveness of the Board of Directors
The Company evaluates the effectiveness of its Board of Directors
annually and reports the results to the Board for discussion.
Evaluation Process

Questionnaires
sent to each
Director and Audit& Supervisory
Board Member(February–March
2023)

Each Director and Audit & Supervisory Board Member
evaluates the following items:● Matters related to the composition of the Board(such as size and diversity)● Matters related to the operation of the Board(such as frequency of meetings and provision of
information in advance)● Matters related to discussions at Board meetings(such as content of agenda items)● Matters related to the monitoring function of the Board● Matters related to dialogue with shareholders andother investors, etc.

Opinion exchange by
Outside Directors andOutside Audit & Supervisory Board Members(May 2023)

Discuss the effectiveness of the Board of Directors, referring also to the results of aforementioned questionnaires
at meetings where only Outside Directors and Audit &Supervisory Board Members are invited to participate.

Discussion at
Board of Directors’
meeting(May 2023)

Based on the results of the aforementioned questionnaire and discussions in the exchange of opinions by
Outside Directors and Outside Audit & Supervisory Board
Members, the effectiveness of the Board of Directors in
the previous fiscal year is evaluated. In addition, efforts
aimed at further improving the effectiveness of the Boardof Directors are also finalized.

About Integrated Report

32

Financial Information

Integrated Report 2023

Social(3)		Policies for determining the calculation method, etc., of				 performance-linked remuneration
				- Regarding basic remuneration for Executive Directors,
				consolidated operating profit shall be used as a performance				indicator in order to link remuneration to short-term business				performance and raise awareness of the need to improve such				performance each fiscal year.
				- In principle, performance-linked remuneration for Executive
				Directors shall be a sum equal to the basic performance-linked
				remuneration amount multiplied by 0–2, depending on the				degree of achievement of the performance index against

Environmental(1)		Executive Directors, and employees of the Furukawa Company				 Group(2)		Business partners of the Group (those who provide products
				or services mainly to the Group and whose transactions with				the Group were equivalent to more than 2% of net sales of				the business partners in the most recent fiscal year of such				business partners) or executives of such business partners(3)		Main business partners of the Group (those who are provided
				products or services by the Group and whose transactions with				the Group were equivalent to more than 2% of net sales of				the Group in the most recent fiscal year of the Group) or				executives of such business partners(4)		Executives of financial institutions that are major lenders to				the Group (lenders whose loan amounts were equivalent to				more than 2% of the Group’s consolidated total assets at the				most recent fiscal year-end)

GovernanceIndependence Standards for Outside Officers(Must not meet the following criteria)(2)		Policies for determining individual remuneration
				- Individual remuneration amounts shall be determined in				accordance with the remuneration standards for directors,
				taking into consideration the position, responsibilities, trends				at other companies, and salary levels of employees, as well as				business performance and other factors.
				- With respect to remuneration for Executive Directors, 10%
				of basic remuneration shall be performance-linked, and 90%
				(additional remuneration for directors, additional remunera				 tion for Representative Directors, and stock acquisition type				 remuneration) shall be fixed.
				- For stock-based remuneration, contributions to the Executive
				Shareholding Association are obligatory as a medium- to				 long-term incentive.

Sustainability

The Company appoints Outside Directors and Outside Audit & Supervisory Board Members with abundant experience and expertisein various fields, as well as impartial perspectives. This is to ensure
the appropriateness of the Company’s management decisions andthe effectiveness of oversight and audits of management.
As of June 29, 2023, the Company has three Outside Directors
and two Outside Audit & Supervisory Board Members.
In addition, the Company stipulates that Outside Officers(Outside Directors and Outside Audit & Supervisory Board Members, including candidates) do not fall under the following criteria concerning independence. Outside Officers who meet such
criteria are designated and registered as Independent Directors/
Auditors under the rules of the Tokyo Stock Exchange. As of June29, 2023, the Company has four Independent Officers.

(1) Basic policies
		- The remuneration system for directors shall function soundly		as an incentive for the sustainable enhancement of corporate		value, and the amount of remuneration for each individual
		director (hereinafter, “individual remuneration”) shall be 		
determined appropriately according to the responsibilities
		of each position.
		- Remuneration for Executive Directors shall consist of basic
		remuneration, additional remuneration for directors, addition		al remuneration for Representative Directors, and stock-based		remuneration. Outside Directors who are responsible for		supervisory functions shall be paid only a certain amount of
		basic remuneration in consideration of their duties, and all
remuneration for directors shall be paid monthly in monetary				form.

Management/Business
Strategies

Independence of Outside Directors and Outside
Audit & Supervisory Board Members

The Company has established the following policies for determining the content of remuneration for each individual director as
follows.

Message from the
Finance Director

By providing an explanation of Medium-Term Business Plan 2025 thatgives a more detailed picture, we will consider forums (not limited to
the Board of Directors) to consider the plan from multiple angles andhave a fulfilling exchange of opinions.
● Aiming to enhance the supervision of the internal control system’s
operation, we will regularly report to the Board of Directors on cause
analysis and countermeasures for problematic cases or serious compliance violations.
● Business site inspections are an effective means of providing information to
Outside Officers. Accordingly, we will consider once again holding Board
meetings at such sites.
●

Remuneration for Directors and Audit & Supervisory
Board Members

Message fromthe President

Future Initiatives

About the Group

While the overall average evaluation remained unchanged from theprevious fiscal year, the evaluation of “free and vigorous discussion” and“communication between internal and outside officers” improved as aresult of enhanced discussion and exchange of opinions in the process
of formulating Medium-Term Business Plan 2025 and other areas.
● The evaluation of “adequate supervision of the establishment andoperation of an internal control system” and other items was somewhat low. The operational status of the internal control system should
be subject to periodic summative evaluation and the results should beshared with the Board of Directors.
● With respect to enhancing the provision of information to Outside Directors
and Outside Audit & Supervisory Board Members, we have implemented several
measures, such as providing explanations of the current status of Group companies. However, continued provision of information, including through site visits,
is necessary to deepen understanding of the Company’s business activities.
● Evaluation of the status of dialogue with shareholders and other investors has
been improved by enhancing regular feedback at Board of Directors’ meetings.
●(5) Individuals earning ¥10 million or more per year from the				Group in monetary or other benefits as specialists (including
				consultants, accountants, and lawyers) excluding executive
				remuneration, or individuals employed by companies earning				¥100 million or more per year from the Group(6) Individual shareholders who hold 10% or more of the				Company’s voting rights (or Executive Directors, Executive
				Officers, or employees of corporations that hold 10% or more				of the Company’s voting rights)(7) Individuals who had fallen under (1) to (6) above in the past				 three-year period(8) Relatives (second degree or closer) of persons who fall under				(1) to (7) above

Management Philosophy
and Vision

Evaluation Results for Fiscal 2022				initially announced targets. However, if natural disasters
				or special circumstances have a significant impact on the				achievement of performance indicators, the Nomination &				Remuneration Committee may take such impact into consider				ation after deliberation.
(4)		Policies for determining payment ratio for each type in				 individual remuneration
				- Regarding remuneration of the Executive Directors, the basic
				remuneration, which is performance-linked, shall account for				around 8% of the total, and the rest shall be fixed.
				- Stock-based remuneration shall be around 10–15% of total
				remuneration for Executive Directors.
(5)		Matters concerning the method of determining the content
				of individual remuneration
				- The Nomination & Remuneration Committee, whose				principal members are Outside Independent Directors, shall				deliberate on individual remuneration in accordance with the				policies described in (1) through (4) above.
				- The President & Representative Director, who is in a position
				to oversee and control the overall performance of the				Company, shall decide specific details of individual
				remuneration based on discretionary assignment from the				Board of Directors and the deliberations by the Nomination &				 Remuneration Committee.
				 Remuneration for Audit & Supervisory Board Members is				determined through consultation between such members.
				Total remuneration amounts (annual) for Directors and Audit &				Supervisory Board Members are as follows.

Officer Type

Total Remuneration by Type
Total
Number(Millions of yen)
Remunerationof Eligible(Millions of
Officers
Performance- Retireyen)(Persons)
ment
LinkedFixedRemuneration Benefit

Directors(Excluding Outside
Directors)

185

162

22

—

6

Audit & Supervisory
Board Members(Excluding Outside
Members)

16

16

—

—

2

Outside Directors

28

28

—

—

3

Outside Audit &Supervisory Board
Members

16

16

—

—

2

Total

247

224

22

—

13

Notes:
1. Furukawa Co., Ltd., resolved to abolish its retirement allowance system for
Directors and Audit & Supervisory Board Members at the conclusion of the140th Annual Shareholders’ Meeting held on June 28, 2007.
2. The above figure for total fixed remuneration does not include payments(totaling ¥40 million) by four subsidiaries of the Company to three Directors
concurrently serving as Directors or Audit & Supervisory Board Members of
those subsidiaries. It also does not include payments (totaling ¥21 million) by
six subsidiaries of the Company to two Audit & Supervisory Board Members
concurrently serving as Directors or Audit & Supervisory Board Members of
those subsidiaries.

33 FURUKAWA CO., LTD.

Skills Required of Board of Directors
The following seven skills have been selected as those that theBoard of Directors should possess in order to realize the Company’s Management Philosophy and management strategies andplans.
(1) Corporate management(2) Business strategy and marketing(3) Technology development and IT(4) Finance and accounting(5) Legal affairs and risk management(6) Personnel and human resource development(7) International perspective
We have selected “(2) Business strategy and marketing” as a skill
item because marketing, which forms the core of our management, goes beyond sales and marketing and goes hand in handwith business strategy. In the Machinery business, we selected“(7) International perspective” to reflect the Company’s commitment to strengthen and rebuild its overseas marketing capabilities
and enhance its product, sales, and service technology capabilities overseas. We believe that the other items—(1) Corporate
management, (3) Technology development and IT, (4) Financeand accounting, (5) Legal affairs and risk management, and (6)Personnel and human resource development—are skills that board
members of a manufacturing company should possess as a matterof course.
The Company’s policy is to strike a balance between the expertise and experience of directors with respect to these skills, as well
as diversity in terms of gender, work experience, and age, within
the limits of the number of directors stipulated in the Articles ofIncorporation.
Election/Dismissal and Nomination Policies andProcedures
Candidates for Directors and Audit & Supervisory Board Members
shall have the character, insight, and ethics appropriate for the
position and be capable of fulfilling the duties and responsibilitiesof the position. In addition, candidates for internal directors shallhave sufficient experience and knowledge of the Company’s
operations and excellent management judgment, and candidates
for Audit & Supervisory Board Members must understand theimportance of auditing in corporate management, possess therequired knowledge, and have a high level of normative awareness.
Nominations of candidates for directors are deliberated by
the Nomination & Remuneration Committee and decided by the
Board of Directors. Nominations of candidates for Audit & Supervisory Board Members are deliberated by the Nomination &Remuneration Committee and decided by the Board of Directors
with the consent of the Audit & Supervisory Board.
The Board of Directors appoints senior management teammembers who are qualified from the perspective of realizing theCompany’s Management Philosophy, management strategy, andso forth. The Nomination & Remuneration Committee deliberates
on whether or not to reappoint such members based on a review of their achievement status against management plans andperformance indicators, including by division, and on whether todismiss them if they engage in fraudulent activities and the like.

About Integrated Report

51.8
43.6

39.4

40

36.0

Main Hosts

Participants

2 timesPresident & Representative Director, Director
in charge of Corporate
Planning Dept.

45 persons from 36
companies(Fund managers,
analysts, etc.)

Individual IR
17 times
meetings

Director in charge ofCorporate Planning
Dept., General Manager
of Corporate Planning
Dept., IR managers, etc.

26 persons from 17
companies(Fund managers,
analysts, etc.)

Results
briefings

Informative materials
Institutional disclosures: Financial statements, Annual			Securities Report, and Corporate			Governance Report
Voluntary disclosures: News releases, Annual Report,			
Sustainability Report, financial results			
presentation materials, shareholder			
newsletters, and other materials
			(videos, brochures, etc.) to promote			understanding of the Company●

2. Main contents of dialogue
38.0

Theme

Business strategy (mainly in the core Machinery business)

35.1
Management
strategy20
100Matters of Interest

Sustainability

30

FY2022
Results

Future of Metals segment and Real Estate business
Overview of business portfolio management
Allocation of management resources

2016

2017

2018

2019

2020

2021 2022 (FY)

Dialogue with Shareholders and Other Investors

Businessresults

ESG

Dividend policy, share buybacks, etc.
Business performance and outlook
Impact of and response to rising prices of steel and otherraw materials
Climate change and decarbonization initiatives
Reduction of strategic shareholdings

Social

3. Feedback from shareholders and other investors
Provide quarterly reports to directors on the status ofindividual IR meetings (main questions and answers, opinions,etc.). Provide report to directors on the status of briefing
sessions, shareholder opinions, etc., as needed. Provide
semiannual reports to the Board of Directors on the status
of dialogue with shareholders and other investors.

●

Environmental

We strive to disclose information to shareholders and other investors in a fair and timely manner and further enhance dialogue
with them through proactive IR events, such as briefings and IR
meetings. To promote a better understanding of the Company,
we also make effective use of tools, such as videos, printed materials, and websites, and provide information in an easier-to-understand manner.
The following table shows the status of the Group’s dialogue
with shareholders and other investors in fiscal 2022.

Shareholder
returns

Governance* Strategic shareholding ratio: Ratio of strategic shareholdings(including holdings deemed to be strategic) to consolidated net assets

Management/Business
Strategies

50

49.0

For institutional investors

Message from the
Finance Director

(%)
60

●

Message fromthe President

Strategic Shareholding Ratio

1. Implementation status
For shareholders
Held Annual Shareholders’ Meeting, sent shareholder
newsletters, etc.

●

About the GroupThe Furukawa Company Group owns strategic shareholdings forthe purpose of improving corporate value over the medium andlong terms by maintaining and strengthening relationships with
important business partners.
Each year, the Board of Directors examines each stock of theCompany’s strategic shareholdings and verifies the purpose forwhich the stock is held and whether the benefits and risks associated with holding the stock are commensurate with the cost ofcapital. The Board of Directors also examines the appropriatenessof continual ownership after comprehensive consideration of both
qualitative and quantitative factors. We will endeavor to reduce
the number of stocks that are no longer necessary to hold byselling them as appropriate.
In exercising voting rights for the Group’s strategic shareholdings, we do not make uniform decisions on whether to approveor disapprove based on routine or short-term criteria. Rather, we
exercise such rights after making appropriate judgments from acomprehensive perspective that fully respects the management
policies and strategies of the issuing company. We also consider
whether the shares will enhance the issuing company’s value andshareholder returns over the medium and long terms, and whether they will not undermine the significance of the Group’s shareholdings.

Management Philosophy
and Vision

Strategic Shareholdings

For more information, please refer to our Corporate Governance
Report.
Financial Information

Corporate Governance Report

Integrated Report 2023

34

Directors (As of June 29, 2023)
Naohisa Miyakawa

Minoru Nakatogawa

Chairman & Representative Director
April 1975: Joined the Company
June 2007: Executive Officer, General Manager,
Human Resources & General Affairs
Department, and General Manager,
Secretary Department
June 2009: Executive Officer of the Company,
President & Representative Director of
Furukawa Denshi Co., Ltd.
June 2011: Director & Senior Executive Officer of theCompany, President & Representative Directorof Furukawa Denshi Co., Ltd.
June 2013: President & Representative Director
June 2021: Chairman & Representative Director(current position)
Holdings in the Company: 48,886 shares
Attendance at Board of Directors‘ meetings: 16 /16 times（100%）

President & Representative Director
April 1983: Joined the Company
June 2017: Executive Officer of the Company, Deputy
President & Director of Furukawa UNIC
Corporation (In charge of Promotion of Midterm Business Plan)
June 2018: Executive Officer of the Company, President& Representative Director of Furukawa UNIC
Corporation
June 2019: Director & Senior Executive Officer of theCompany, President & Representative Director of Furukawa UNIC Corporation
June 2020: Director & Managing Executive Officer of
the Company, President & Representative
Director of Furukawa UNIC Corporation
June 2021: President & Representative Director(current position)
Holdings in the Company: 17,232 shares
Attendance at Board of Directors‘ meetings: 16/16 times（100%）

Masahiro Ogino

Hiroyuki Sakai

Director, Deputy President & Executive Officer
Assistant to the President; in charge of Machinery
Business (Industrial Machinery, Rock Drill Machinery, andUNIC Machinery Segments) and Purchasing Department
April 1982: Joined the Company
June 2015: Executive Officer of the Company, President &Representative Director of Furukawa Metals &Resources Co., Ltd.
June 2017: Director, Senior Executive Officer, and General
Manager, Corporate Planning Department
June 2019: Director, Managing Executive Officer, and General Manager, Corporate Planning Department
June 2021: Senior Managing Director & Senior Managing
Executive Officer of the Company, President &Representative Director of Furukawa Rock Drill
Co., Ltd. (current position)
June 2023: Director, Deputy President & Executive Officer(current position)
Holdings in the Company: 16,316 shares
Attendance at Board of Directors‘ meetings: 16 /16 times（100%）

Director & Managing Executive Officer
In charge of Metals Segment, Real Estate Business,
Environmental & Safety Management Department, Human
Resources & General Affairs Department, Legal Department, Information System Department, and Internal Audit
Department
April 1982: Joined the Company
June 2017: Executive Officer and General Manager,
Business Process Re-engineering Department
June 2019: Director & Senior Executive Officer andGeneral Manager, Business Process Reengineering Department
June 2021: Director & Senior Executive Officer and General
Manager, Corporate Planning Department
June 2022: Managing Director (current position)
June 2023: Director & Managing Executive Officer(current position)
Holdings in the Company: 12,878 shares
Attendance at Board of Directors‘ meetings: 16 /16 times（100%）

Tatsuki Nazuka

Koichiro Konno

Director & Managing Executive Officer
In charge of Electronics Segment, Chemicals
Segment, and Technology Division
April 1981: Joined the Company
June 2015: Executive Officer and Deputy General
Manager, Development Division
June 2017: Executive Officer and General Manager,
Development Division
October 2017: Executive Officer and General Manager,
Technology Division
June 2019: Director & Senior Executive Officer and General
Manager, Technology Division
June 2022: Director & Managing Executive Officerof the Company and General Manager,
Technology Division
June 2023: Director & Managing Executive Officer(current position)
Holdings in the Company: 11,306 shares
Attendance at Board of Directors‘ meetings: 16 /16 times（100%）

Director & Senior Executive Officer
In charge of Corporate Planning Department, Sustainability Promotion Department, Accounting Department, andFinancial Department
April 1985: Joined the Company
June 2021: Executive Officer and General Manager,
Financial Department
June 2022: Executive Officer and General Manager,
Corporate Planning Department
June 2023: Director & Senior Executive Officer, General
Manager, Corporate Planning Department(current position)
Holdings in the Company: 1,719 shares
Attendance at Board of Directors‘ meetings: —Tatsuya Tejima

Yoichi Mukae

Outside Director (Independent)
April 1969: Joined Toho Zinc Co., Ltd.
June 2003: Representative Director & Managing Director,& Managing Executive Officer of Toho Zinc
Co., Ltd.
June 2005: Representative Director & Senior Managing
Director, & Senior Managing Executive Officerof Toho Zinc Co., Ltd.
June 2006: Representative Director & COO of Toho Zinc
Co., Ltd.
June 2008: Representative Director & President of Toho
Zinc Co., Ltd.
June 2017: Advisor of Toho Zinc Co., Ltd. (current
position), Director of the Company (current
position)
June 2018: Outside Director, HANWA Co., Ltd.
(current position)
Holdings in the Company: 7,786 shares
Attendance at Board of Directors‘ meetings: 16 /16 times（100%）

Kazumi Nishino

Outside Director (Independent)
April 1992: Joined Fuji Photo Film Co., Ltd. (retired in March 1996)
April 2006: Associate Professor, Department of Management of Science & Technology,
Graduate School of Management of Science & Technology, Tokyo Universityof Science Graduate School
April 2017: Associate Professor, Graduate School of Commerce andManagement of Hitotsubashi University
June 2019: Associate Professor, Graduate School of Business Administration,
Hitotsubashi University, Outside Director, Orient Corporation(current position), and Director of the Company (current position)
December 2019: Outside Director, MiRTeL Co., Ltd.
April 2022: Professor, Graduate School of Business
Administration, Hitotsubashi University (current position)
June 2022: Outside Director, Makino Milling Machine Co., Ltd. (current position)
Holdings in the Company: 6,945 shares
Attendance at Board of Directors‘ meetings: 15/16 times（93%）

35 FURUKAWA CO., LTD.

Outside Director (Independent)
April 1975: Joined Ministry of International Trade andIndustry
June 2004: Director-General for Commerce andDistribution Policy, Minister’s Secretariat of
Ministry of Economy, Trade and Industry
August 2006: Managing Director of The Shoko Chukin
Bank, Ltd.
August 2008: Advisor of The Kansai Electric Power Company,
Incorporated
June 2009: Managing Director of The Kansai ElectricPower Company, Incorporated
June 2013: Director, Managing Executive Officer of The
Kansai Electric Power Company, Incorporated
June 2015: President & Representative Director of
The Kanden L&A Company, Limited, andPresident & Representative Director of
KANDEN EL AUTO SYSTEM Co., Ltd.
June 2019: Director of the Company(current position)
June 2020: Advisor of The Kanden L&A Company,
Limited, Representative Director of ResearchInstitute of Economy, Trade and Industry(current position), and President of GS1
Japan (current position)
Holdings in the Company: 10,466 shares
Attendance at Board of Directors‘ meetings: 16 /16 times（100%）

Masayuki Yamashita

Masatoshi Yano

Audit & Supervisory Board Member (Full-Time)
April 1984: Joined the Company
June 2020: Executive Officer, General Manager,
Accounting Department
June 2023: Audit & Supervisory Board Member (Full-time)(current position)
Holdings in the Company: 3,500 shares
Attendance at Audit & Supervisory Board’s meetings: —Managing Executive
Officer

Hiroyuki Sakai

Managing Executive
Officer

Tatsuki Nazuka

Senior Executive
Officer

Koichiro Konno

General Manager, Corporate
Planning Department

Senior Executive
OfficerAtsushi Takano

General Manager, Human
Resources & General Affairs
Department

Senior Executive
OfficerTakeshi Miyajima

General Manager, Legal
Department

Executive Officer

Kazuyoshi Iwama

President & Representative
Director, Furukawa Industrial
Machinery Systems Co., Ltd.

Executive Officer

Kenji Yamakawa

President & Representative Director,
Furukawa UNIC Corporation

Executive Officer

Kenichi Kurita

President & Representative
Director, Oita Mining Co., Ltd.

Governance

Masahiro Ogino

Independence

Corporate Business Strategy/ Technology
Management
Marketing
Development/IT

Naohisa Miyakawa○○

Minoru Nakatogawa

○

○

Legal
Affairs/Risk
Management

HR/
Internationality
HR Development

○
○

○

○

○

Hiroyuki Sakai○

Tatsuki Nazuka○

Social○Masahiro Ogino

Finance/
Accounting

Environmental

Directors’ Expertise and Experience (Skills Matrix)
Name

Sustainability

Deputy President &Executive Officer

Management/Business
Strategies

Executive Officers (As of June 29, 2023)

Message from the
Finance Director

Outside Audit & Supervisory Board Member(Independent)
April 1980: Joined The Dai-Ichi Kangyo Bank, Ltd.
April 2007: Executive Officer, General Manager,
Head Office of Mizuho Bank, Ltd.
April 2009: Managing Executive Officer of Mizuho
Bank, Ltd.
April 2011: Deputy President of Mizuho Bank, Ltd.
June 2013: Representative Director & Deputy Presidentof Chuo-Fudosan Co., Ltd.
June 2015: President & Representative Director of
Chuo-Fudosan Co., Ltd.
June 2018: President & Representative Director of
Seiwa Building Co., Ltd.
June 2019: Outside Audit & Supervisory Board
Member of Seiko Holdings Corporation
June 2023: Outside Audit & Supervisory Board
Member of Seiko Group Corporation(current position), Audit & Supervisory
Board Member of the Company (current
position)
Holdings in the Company: 0 shares
Attendance at Audit & Supervisory Board’s meetings: —Message fromthe President

Outside Audit & Supervisory Board Member
April 1980: Joined Asahi Mutual Life Insurance Company
April 2016: Representative Director & Senior Executive
Officer, Asahi Mutual Life Insurance Company,
Outside Director of Rasa Industries, Ltd.
(June 2014)
June 2016: Audit & Supervisory Board Member of theCompany (current position)
April 2018: Director, Asahi Mutual Life Insurance
Company
June 2018: President & Representative Director,
Info Techno Asahi Co., Ltd.
June 2019: Outside Director, Rasa Industries, Ltd. (Audit &Supervisory Committee)
Holdings in the Company: 0 shares
Attendance at Audit & Supervisory Board’s meetings: 6/6 times（100%）

About the Group

Akira Mikage

Audit & Supervisory Board Member (Full-Time)
April 1980: Joined the Company
June 2011: General Manager, Real Estate Division
June 2014: Executive Officer, General Manager,
Corporate Planning Department
June 2016: Senior Executive Officer, General Manager,
Corporate Planning
Department
June 2017: Audit & Supervisory Board Member(Full-time) (current position)
Holdings in the Company: 7,058 shares
Attendance at Audit & Supervisory Board’s meetings: 6/6 times（100%）

Management Philosophy
and Vision

Kazuo Inoue

About Integrated Report

Audit & Supervisory Board Members (As of June 29, 2023)○○

Koichiro Konno★

○

Yoichi Mukae★

○

Kazumi Nishino★

Financial Information

Tatsuya Tejima

○
○
○

○
Integrated Report 2023

36

G: Governance

Establishment of an Enterprise Risk Management System
Basic Approach to Risk Management
The Furukawa Company Group will strengthen and expand its
enterprise risk management system to strengthen its managementfoundation with a view toward growth. We will also work to enhance corporate value by engaging in business practices that take
into consideration the Group’s CSR and ESG issues.
The Risk Management Committee established at Furukawa Co.,
Ltd., works to protect lives and property and minimize damage
and loss when risks that could interfere with the Group’s businessactivities materialize.
Risk Management System
To manage all risks surrounding the Group, the Risk Management
Committee evaluates the risks of each Group company anddivision, as well as examines and assesses measures to deal withthose risks. When a risk is judged to pose a danger of seriously
affecting Group management, the Committee works to effectively manage that risk by reporting its evaluation results and thepros and cons of countermeasures to the Board of Directors.
Under the Risk Management Committee are four subordinate
organizations: Human Rights Risk Sectional Meeting, Environmental Risk Sectional Meeting, Group BCP Sectional Meeting,
Risk Management System

Board of Directors /President & Representative Director
Instruction

Sustainability Promotion Meeting
Comprehensive deliberations onsustainability / CSR

Reporting
Risk Management Committee

Interaction

and Information Security Sectional Meeting. These work to
resolve various issues related to such matters as human rights,
climate change (including carbon neutrality), business continuity(when crises occur), and information security.
System for Supervision of Human Rights and Labor Issues
by the Board of Directors
The Group is committed to “respect for human rights” and“enhancement of the work environment” as stipulated in the
Furukawa Company Group’s Charter of Corporate Conduct andthe Furukawa Company Group’s Code of Conduct for Officers andEmployees (both approved by the Board of Directors). Accordingly,
we are working to ensure that all Group officers and employees
are fully aware of these standards.
In the event of compliance violations concerning human rights
and labor issues, including legal and harassment, the Compliance
Committee conducts an investigation and takes necessary measures. The results of these are reported to the Board of Directors
through the Legal Department, which serves as the secretariat of
the Compliance Committee.
Business Continuity Management (BCM)
Going forward, the Group BCP Sectional Meeting will focus on
verifying and reviewing the business continuity plans (BCPs) ofeach Group company and ensuring effective BCM outcomes.
Group BCP Structure
Headquarters for
BCP

Comprehensive deliberations onenterprise risk management

Sustainability Promotion Instruction
Department(Secretariat)

Reporting

Secretariat of
headquarters for BCP

Human Rights Risk
Sectional Meeting

General Affairs Team

Environmental Risk
Sectional Meeting

Human Resources TeamGroup BCP
Sectional Meeting

Public Relations Team

1

2

3

4

Finance Team

Information Security
Sectional Meeting

Headquartersinan emergencyofeach company

Information Analysis Team
Implementation Bodies (PDCA Cycle)
Environment Team

Furukawa Co., Ltd. Relevant DepartmentsCore Operating
Companies

Furukawa Industrial Machinery Furukawa Metals & Resources
Co., Ltd.
Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd. Furukawa Denshi Co., Ltd.
Furukawa UNIC Corporation Furukawa Chemicals Co., Ltd.

Message from Chairman of the
Risk Management Committee

1. Director-generals of headquarters for BCP
2. Vice Director-generals of headquarters for BCP

3. Committee members of headquarters for BCP
4. Chief Secretariat of headquarters for BCP

Director & Senior Executive Officer
General Manager, Corporate Planning Department
Chairman, Risk Management Committee

Koichiro Konno

Managing increasingly diverse andcomplex risks to help strengthen our management foundation

The purpose of the Risk Management Committee is to engage in comprehensive deliberations on importantmatters related to enterprise risk management.
To further enhance risk management, in fiscal 2022 we established the Human Rights Risk Sectional
Meeting, Environmental Risk Sectional Meeting, Group BCP Sectional Meeting, and Information Security
Sectional Meeting as subordinate organizations under the Committee. In addition to its traditional response to
the risk of natural disasters, the Committee will report to the Board of Directors on matters that may have a significant impact on the Group’s
management, including human rights risk, environmental risk, and information security risk, as well as measures to address such risks.
37 FURUKAWA CO., LTD.

About Integrated Report

Basic Approach

Compliance System

Compliance Education
We publish Compliance News to provide information on compliance to all officers and employees of the Group. Our top management also explains the importance and priority of compliancefrom time to time. In these and other ways, we work to foster a
corporate climate that emphasizes compliance.
In light of the impact of COVID-19, in fiscal 2022 we usedonline systems, such as web conferencing systems and video
streaming, but also conducted itemized training in person.

◼ Training in Fiscal 2022
No. of Participants(No. of Training
Courses)
47 persons (2 times)

Training Type
Compliance training for new employees

Training on preparation of contract documents
Compliance training for Managers

39 persons (1 time)

Training on the Act against Delay in Payment of
Subcontract Proceeds, etc. to Subcontractors

21 persons (1 time)Compliance training based on results of compliance awareness survey

90 persons (2 times)

Internal Reporting System

The Group enacted its Basic Policy for Preventing Bribery andCorruption and the Basic Guidelines for Preventing Bribery andCorruption and reported to the Board of Directors in January
2021. This explicitly states externally the Group’s stance regarding prevention of bribery and corruption. It also clarifies specificprocedures for preventing bribery and corruption in businessactivities. We are following up with comprehensive compliancewith this policy and guidelines and taking steps to prevent bribery
and corruption.
Charter of Corporate Conduct/Code of Conduct for
Officers and Employees/Basic Policy and Guidelines forPreventing Bribery and Corruption

Environmental

Senior Executive Officer
General Manager, Legal Department
Chairman, Compliance Committee

Governance

Message from Chairman of theCompliance Committee

Basic Policy and Guidelines for Preventing Bribery andCorruption

Sustainability

The Group has adopted an internal reporting system to facilitate
early detection and correction of compliance violations. This
has involved developing a framework that enables an extensive
range of reporting and inquiries by establishing points of contact
for reporting and consultation requests inside and outside (lawoffice) the Group. When reports and requests for consultation
are received, the Compliance Committee investigates and takes
measures as necessary. Personal information about whistleblowers who make reports and information that may lead to identification of whistleblowers who make reports are held under strict
control at the Internal Reporting Desk. In addition, it is forbidden
for Group officers and employees to seek out whistleblowers or,
taking the fact of having made an internal report as the reason,
to treat the whistleblowers in a disadvantageous manner. We also

Management/Business
Strategies

25 persons (1 time)
Approx. 200 persons(1 time)Message from the
Finance Director

Compliance training by job level (Grade 6)

Message fromthe President

The Group’s chief executive for compliance is the President of
Furukawa Co., Ltd. Personnel responsible for compliance are alsopresent in every Company department and in Group companies
as well. We also have a Compliance Committee that promotes
Group compliance activities, deliberates on important mattersrelating to compliance, enhances the compliance system, andtakes steps to strengthen awareness about compliance. Details ofmatters deliberated by the Committee are additionally reported
to the Sustainability Promotion Meeting as required, and steps
are taken to share information related to compliance with theGroup as a whole.
In addition, compliance violation cases are reported to theBoard of Directors on a regular basis.

facilitate awareness of the internal reporting system by postingsuch content to our in-house portal site and distributing brochures to Group officers and employees.

About the GroupIn addition to complying with laws and regulations, the Furukawa
Company Group believes it has a corporate obligation to takeserious and responsible action in terms of social and ethical aspects.
To fulfill this obligation, we established the Furukawa Company
Group’s Charter of Corporate Conduct and the Furukawa Company Group’s Code of Conduct for Officers and Employees andare taking steps to foster comprehensive awareness to enable allGroup officers and employees to engage in operations in awareness of the importance of compliance.

Management Philosophy
and Vision

Ensuring Effective ComplianceTakeshi Miyajima

By raising awareness of compliance among
officers and employees, we will help strengthen
our management foundation and enhance corporate value.

SocialIntegrated Report 2023

Financial Information

The Compliance Committee is an organization that deliberates important compliance-related matters and promotes
compliance activities within the Group. In fiscal 2022, the Committee analyzed and disclosed the results of the compliance awareness survey conducted in the previous fiscal year and focused on issues and problems that need to beaddressed. The Committee also revised its Compliance Manual, took measures to disseminate information on theinternal reporting system (by distributing leaflets and posters, etc.), modified regulations on preventing insider trading, and conducted compliance-related
training for directors and officers. To improve its ability to prevent compliance violations, we will create compliance training videos, revise and expand various manuals, and share information on cases of violations. To strengthen the Group’s foundation management and help enhance corporate value, we willcontinue striving to ensure that all executives and employees have a high level of compliance awareness that is acceptable in the international community.
38

E: Environmental

Promoting Climate Change Action in Our Business Activities
Disclosure Based on TCFD Recommendations
At its meeting held on August 9, 2023, the Board of Directors of
the Furukawa Company Group resolved to express its support for
the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and announced its intention to disclose
information based on the said recommendations. Going forward,
we will work to enhance the quality and quantity of informationon the four core disclosure elements of the TCFD recommendations(Governance, Strategy, Risk Management, and Metrics and Targets).

importance. The director in charge of the Sustainability Promotion
Department reports on the progress and results of climate change
responses to the Board of Directors from time to time, thereby
providing proper oversight by the Board.

Organizations and Meeting Bodies and Their Roles
Board of Directors●

Governance
The Furukawa Company Group recognizes that risks and opportunities associated with climate change represent an importantmanagement issue and is working to reduce greenhouse gas(GHG) emissions among other things. The Sustainability Promotion Meeting, chaired by the President & Representative Director,
deliberates on how to address issues related to climate change
and reports details of its deliberations to the Board of Directors.
The Sustainability Promotion Meeting discusses various mattersrelated to climate change. These include formulation of basic policies and action plans for the Group’s climate change responses,
development of a promotion framework, verification and evaluation of the status of activities, and education and public relations
measures. In addition to Company directors and the presidents ofeach core operating company, the Meeting includes the chairmanof the Environmental & Safety Management Committee (generalmanager of the Environmental & Safety Management Department) and the general manager of the Sustainability Promotion
Department. The Sustainability Promotion Department and theEnvironmental & Safety Management Department formulate theGroup’s climate change response strategies, manage targets, anddevelop a climate-related transition plan (roadmap) based on deliberations and suggestions made by the Meeting. Those departments also work together with the implementation bodies (Group
companies and the Company’s relevant departments) to develop a
PDCA cycle of planning, execution, evaluation, and improvement.
Implementation of climate change responses by the Group
companies and the Company’s relevant departments are
subject to institutional decisions by the Company’s Management
Council, Board of Directors, and others according to the level ofGovernance
ChangeResponses
Responses◼
GovernanceStructure
Structurefor
for Climate
Climate Change
Board of Directors

Instruction●

Climate change response oversight

Reporting

Sustainability Promotion Meeting

Chairman = President &Representative Director
General deliberations on
climate change responses
Environmental & Safety
Management Department

Interaction

Alignment withGroupwide risks

Risk Management Committee
Secretariat
Sustainability Promotion
Department

Interaction

Interaction

Formulate the Group’s climatechange response strategies
Manage targets
Develop climate-relatedtransition plan (roadmap), etc.

Execution of climate change responses (PDCA implementation)

Core Operating
Companies

Relevant departments
Furukawa Industrial Machinery Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd.
Furukawa UNIC Corporation
Furukawa Metals & Resources Co., Ltd.
Furukawa Denshi Co., Ltd.
Furukawa Chemicals Co., Ltd.

39 FURUKAWA CO., LTD.

Request/instruct the Sustainability Promotion Meeting on climate-related
matters and deliberate on matters reported and/or proposed by the Meeting
Oversee the resolution and execution of important matters related toclimate change

Sustainability Promotion Meeting
Discuss and formulate basic policies and action plans for the Group’s
climate change responses, development of a promotion system,
verification and evaluation of the status of activities, and educationand public relations measures● Meet once a year, in principle, and otherwise as needed
Sustainability Promotion Department
Environmental & Safety Management Department●

Formulate the Group’s climate change response strategies, manage
targets, develop climate-related transition plan (roadmap), etc.
Oversee the PDCA cycle in collaboration with the implementation
bodies for climate change responses
Relevant departments of Furukawa Co., Ltd.
Core operating companies●●●

Serve as implementation bodies to deploy PDCA cycle for climatechange responses

Strategy
The Group operates numerous businesses and recognizes that therisks and opportunities associated with climate change vary frombusiness to business. With this in mind, we decided to conduct asequential scenario analysis of each business segment from two
perspectives: the impact of climate change and the scale of business sales. As a first step, we conducted scenario analyses of theRock Drill Machinery segment and Metals segment from February
to June 2023.
For the scenario analyses, we set 1.5˚C and 4˚C scenarios basedon scientific evidence from the International Energy Agency (IEA)
and other sources. We then evaluated the significance ofclimate-related risks and opportunities that could affect our business in 2030 and 2050.
We plan to conduct scenario analyses of other segments as wellwhile continuously reviewing the analyses of segments alreadycovered. We will also disclose information about risks and opportunities we have identified in a timely and appropriate manner.
Set Scenarios

Worldview

There is a risk of cost increases due to theJapanese government’s push to introduce
1.5˚C Scenario
GHG emission regulations and a carbon tax.
Emergence of transition ● With attention focused on products with low
risks and opportunities
environmental impact, we see opportunities forrevenues from sales of materials for⇒ 2030 assumption increased
EVs and renewable energy facilities, as well as
products with high energy-saving performances.
●

Implementation Bodies

Furukawa Co., Ltd.

●

Extreme weather conditions will cause increases
in natural disasters and rising temperatures,
leading to the risk of damage to business sites andsystem facilities, as well as the risk of increased
costs, such as higher raw material prices, due todifficulties in procuring materials.
● Given progress in technological countermeasuresand investments to address extreme weather
events, we see opportunities for increased revenues
from related products, technologies, and services.
●

4˚C Scenario

Emergence of physicalrisks and opportunities⇒ 2050 assumption

Scope of this year’s analysis: Rock Drill Machinery segment (Furukawa Rock		Drill Co., Ltd.); Metals segment (Furukawa
		
Metals & Resources Co., Ltd.)		* Combined sales of above two segments as			percentage of consolidated net sales: 68.7% (FY2022)

About Integrated ReportManagement Philosophy
and Vision(1) Lists of risks and opportunities
Among identified risks and opportunities, those deemed to have a “medium” or greater impact on our business are listed below.
<Degree of impact>
Large: Major impact on the Furukawa Company Group Medium: Limited impact on the Furukawa Company Group
Small: Minimal impact on the Furukawa Company GroupCountermeasures

Government policies/regulations

Introduction of a carbon tax
will increase transportation andother fuel procurement costs,
as well as production costs andoperational costs (GHG response costs related to electricity and delivery).

Large

Small

Technology

4℃

Failure to meet needs of themarket, which favors productswith low environmental impact,
will result in lower sales.

MediumSmall●

Market1.5℃

Switch to renewable energy, save energy, and reduce the environmental
impact of our products● Utilize renewable energy sources, such as solar power● Improve energy efficiency by introducing LED lighting and energy-saving equipment,
reviewing manufacturing processes, and strengthening GHG emission controls at
production facilities● Reduce environmental impact of our products by using recyclable materials andextending product life
● Increase use of environmentally friendly vehicles, such as EVs● Reduce GHG emissions through purchase of non-fossil certificates, etc.

Expanding the share of renewable energy in the power supply
mix of electric utilities will raise
the price of electricity andincrease operating costs.

Small

Promote renewable energy power sources to reduce electricity costs, use more renewable energy sources, conserve energy, and reduce environmental impact of our products● Promote renewable energy sources with zero CO2 emission factors to reduce
electricity costs● Improve energy efficiency by introducing LED lighting and energy-saving equipment,
reviewing manufacturing processes, and strengthening GHG emission controls at
production facilities
Minimize damage and ensure proper management when disaster strikes
Secure multiple means of transportation● Diversify suppliers and work to minimize damage in the event of extreme weather conditions● Reinforce flood countermeasures at factories● Conduct regular water risk assessments at suppliers and sites and perform rigorous
risk management in the event of flooding or inundation● Implement a BCP as a support and reporting protocol in theevent of damage

Countermeasures

Sustainability

Extreme weather events (such as
flooding) may cause offices andfactories to shut down, resulting in decreased sales and/or
increased restoration costs.

MediumShift to products with low environmental impact
Collaborate with suppliers to manufacture and develop products with low
environmental impact

Management/Business
Strategies

AcuteTransition risk

Qualitative Evaluation

●

Small

Large

◼ List of Opportunities

MarketTechnology

Opportunity Description

Qualitative Evaluation

1.5℃

4℃

Rising demand for machines that
contribute to decarbonization will
help bolster sales.

Large

Small

●

Make capital investments to meet demand

Reconstruction projects after disasters caused by extreme weather
events will generate demand forour products.

Small

Large

●

Make capital investments and develop products to meet demand

Sales of products that contribute toenergy conservation will increase.

Large

Small

●

Collaborate with suppliers to expand lineup of energy-saving products

Governance

Opportunity

Type ofOpportunity

Message from the
Finance Director

Physical risk

Risk Description

Message fromthe President

Risk

Type of Risk

About the Group◼ List of Risks

Integrated Report 2023

40

Financial Information

Metrics and Targets
While the physical risks associated with climate change are
expected to increase, the government’s stated goals of “reducing
GHG emissions by 46% from the fiscal 2013 level by fiscal 2030”
and “achieving carbon neutrality by 2050” indicate that risks andopportunities related to the transition to a low-carbon economy
will increase in the future. To achieve sustainable growth amid
these changes, it is essential that the Group continues to identify
risks and opportunities and step up efforts to address initiatives on
climate change. With this in mind, we plan to develop a roadmap
outlining the Group’s responses toward carbon neutrality by fiscal
2025. Committed to helping realize a decarbonized society, we
will strive to provide products, technologies, and services that arehighly effective in reducing GHG emissions and reduce emissions
associated with our business activities.

Social

Risk Management
Assessment of climate-related risks and consideration of countermeasures are conducted by the Risk Management Committee,
which comprehensively deliberates important matters related
to Groupwide risk management. The Committee is chaired by
the director in charge of sustainability of the Company, and theSustainability Promotion Department serves as its secretariat.
The Committee meets twice a year in principle. Its members are
selected from every Company department and core operatingcompanies. Together with the secretariat, the members assessclimate-related risks affecting the Group, consider and formulate
countermeasures, and report the results to the Board of Directors,
thereby proper oversight is provided by the Board.

Environmental(2) Risks /opportunities and financial impacts based on relevant scenarios and strategies, and resilience against themIn this scenario analysis, we collected data necessary to calculate parameters and financial impacts and also performed a simplified calculation of the potential risks and opportunities. In the next fiscal year and beyond, we will conduct scenario analyses of segments otherthan those covered this fiscal year. We will also calculate the financial impact of risks and opportunities that may affect the Group andreflect such calculations in our business strategies.

E: Environmental

Biodiversity Protection Activities
Approach to Biodiversity
Based on the Biodiversity Action Guidelines established in 2012,
the Group has been engaging in activities aimed at preserving andrestoring biodiversity. These include continuous greening activities
and sound development of mountains and forests.
Rather than using introduced species, we select native species of
local origin for our greening activities.
In the Matsuki Valley (Ashio-machi, Nikko City, Tochigi Prefecture), the formerly abundant nature is coming back. In the Ashio
area, which includes the Matsuki Valley, investigations have revealed that the ecological pyramid is being reshaped, with birds ofprey at the top, followed by mammals (such as Asian black bears
and Japanese serows), birds, amphibians, and reptiles.
Going forward, we will carry on with greening efforts not onlyin the Ashio area but also at Company-owned properties throughout Japan, furthering activities for the restoration and recovery ofabundant ecosystems.
In addition, we will continue investigating the operations ofeach of the Group site to identify which risks exist from theperspective of biodiversity conservation, and will discuss ways toreduce those risks with each site.

Biodiversity Protection Activities
Continuous Mountain and Forest Management(Company-Owned Mountain Forestland)
Mountain forestland owned by the Company, totaling approximately 2,200 hectares nationwide, contributes to CO2 absorption,
protection of biodiversity, securing water resources, and so on.
We carry out mountain and forest management in collaboration
with local forest owners’ cooperatives, systematically thinning,
clearing undergrowth, trimming branches, and so on, for thesound development of the mountain forestland. We are also engaged in discussions with the local forest owners’ cooperative on
the Onuma Mountain Forest (Toyone-mura, Kitashitara-gun, Aichi
Prefecture) related to logging and new planting.
In the Onuma Mountain Forest, there is an enormous Japanesehorse chestnut tree (root circumference 15.3 m; diameter at
breast height 7.48 m; diameter at eye level 7.45 m; height 32.5 m;
branch length 46 m; estimated age several centuries) that wehave been carefully safeguarding for many
years. In April 2008, the tree was designateda natural monument of Toyone-mura, Aichi
Prefecture, and in July 2022, it was newly
selected to be a designated cultural property(natural monument) of Aichi Prefecture.
At the Kune Mountain Forest (Tenryu-ku,
Hamamatsu City, Shizuoka Prefecture), we
have a forest management contract with thelocal forest owners’ cooperative to maintainJapanese horse chestnut tree
and manage the forest.

Preventing Pollution
Approach to Management of Chemical Substances

Japanese serow and Asian black bear
(Ashio-machi, Nikko City, Tochigi Prefecture)
Biodiversity Action Guidelines

Message from Chairman of the Environmental& Safety Management Committee

Chemical substances are indispensable in our daily lives, but theyalso have safety implications that represent a social issue. With
this in mind, the Furukawa Company Group is taking steps toproperly manage the risk of volatile organic compounds (VOCs)
and other chemical substances and reduce emissions in light ofglobal laws and regulations and trends.
Details of these activities are explained in our Sustainability Book.

  Furukawa Company Group Sustainability Book
Corporate Officer
General Manager, Environmental &Safety Management Department
Chairman, Environmental &Safety Management Committee

Masayuki Kunou

We will accelerate planned and ongoing efforts byvisualizing the results of environmental protection activities.
To help realize a sustainable society, the Group is systematically and continuously promoting environmental
protection activities to address challenges to the global environment and biodiversity. To this end, we are introducing production machinery and equipment with high energy-saving performances while emphasizing safe andefficient operations. In fiscal 2022, in addition to the annual Environmental and Safety Audits and theEnvironment/Safety Promotion Meetings, we held a meeting in September 2022 to discuss ways to achieve carbon neutrality. The Meeting wasattended by plant managers and general managers of the production divisions of core operating companies. As part of our efforts to achieve carbon neutrality, we have finished gathering information on estimated reductions in power generation and CO2 emissions resulting from the installation of solar panels at each production site. Based on our findings, we will take concrete actions, such as determining the order in which sites will
be equipped with solar power generation facilities. In response to the recent spate of natural disasters, each production site is once again identifying its specific risks. Meanwhile, we are systematically implementing start-up work at suspended or abandoned mines to strengthen their resiliencein the event of a disaster. As part of our biodiversity preservation activities, we are discussing with local forest owners’ cooperatives about future
forest management plans, including logging and new planting in the forests we own. In July 2022, an enormous Japanese horse chestnut tree in
our Onuma Mountain Forest (Toyone-mura, Kitashitara-gun, Aichi Prefecture), already designated as a cultural property by Toyone-mura in 2008, wasnewly designated a cultural property (natural monument) of Aichi Prefecture. The Company will continue its efforts to maintain and manage forests.
41 FURUKAWA CO., LTD.

About Integrated Report

S: Social

Basic Approach

Preventing harassment (harassment training for management-level employees)
Our “Policy on Measures to Prevent and Eliminate Harassment in
the Workplace” includes (1) definition of harassment, (2) scopeof application, (3) responsibilities of superiors, (4) cooperation of
employees, (5) consultation and complaint handling contact point,(6) prohibition of prejudicial treatment, (7) confidentiality obligation, and (8) disciplinary actions. We are also working to prevent
harassment by having management-level employees become
more aware of the issue through harassment training.

About the GroupIn the Furukawa Company Group’s Charter of Corporate Conduct
and the Furukawa Company Group’s Code of Conduct for Officers
and Employees, the Group states its commitment to respecting
the human rights of all people, forbidding child labor and forcedlabor, and rejecting discriminatory treatment, behavior, andspeech with regard to nationality, race, gender, age, faith, religion,social status, disability, and so on. In these ways, we emphasize
business activities that respect human rights.

Management Philosophy
and Vision

Respect for Human Rights

Furukawa Company Group’s Charter of Corporate Conduct

Human Rights Training

Preventing Human Rights Violations

Message from the
Finance Director

The Group strives to create a corporate culture that recognizes thediverse values of individuals, is free from human rights violations
and discrimination, is subject to fair evaluation, and is a rewarding
place to work. Accordingly, we prohibit all forms of harassment
and discrimination. Moreover, we resolutely take action against
harassment and discrimination based on our internal rules.

The Furukawa Company Group’s Code of Conduct for Officers
and Employees emphasizes respect for basic human rights andrejection of discriminatory language and behavior. All new employees participate in human rights training when they join the
Company. In addition, employees participating in grade-specifictraining take in-house training courses on harassment in theworkplace to learn about specific examples that help create acomfortable work environment and respect for human rights.
In these ways, we are working to instill the Code of Conduct
throughout the Group.

Message fromthe President

Furukawa Company Group’s Code of Conduct for Officers and Employees

Management/Business
Strategies

Preventing child labor and forced labor
The Furukawa Company Group’s Code of Conduct for Officers
and Employees includes a policy of rejecting child labor or forcedlabor and requiring its business partners to refrain from suchpractices. When hiring, we ask applicants to submit documents
required by employment regulations and thoroughly checkapplicants’ age and other relevant information.

Future Initiatives
To strengthen the Group’s commitment to the material issue ofrespecting human rights and to address the issue together withstakeholders, we will start building a human rights due diligence
protocol. We also established the Human Rights Risk Sectional
Meeting under the Risk Management Committee to formulate
human rights policies that reflect international norms. Furthermore, if the Group is found to have caused or to have been
involved in an event that negatively impacts human rights, we will
work to remedy the situation through appropriate procedures.

Environmental- Understanding overtime information
We use our Companywide work system to properly monitor
employee working hours. Employees who exceed a certain
number of hours are subject to corrective measures, including
reviews of their work by department managers, with the aimsof reducing long working hours and equalizing workloads.

Human rights training session

Governance- Promoting use of paid annual leave
We encourage employees to take annual paid leave by setting
incentive days and planned exercises. We also have a systemallowing employees to save and accumulate expired annual paid
leave that can be used if employees require long-term medical
treatment due to personal injury or illness.

Sustainability

Reducing excessive working hours
The Group is working to reduce overtime and optimize working
hours to ensure the sound mental and physical health of its
employees and help them achieve a good work–life balance.

SocialFinancial Information

Integrated Report 2023

42

S: Social

Safe and Rewarding Work Environments that Consider Employees’ Health
Health Declaration

Employee Health Management

The Furukawa Company Group issued a Health Declaration dated
January 1, 2021, and we have further strengthened our efforts topromote health management.

Furukawa Company Group
Health Declaration
Furukawa Company Group was the first in Japan to adopt
the principle of SAFETY FIRST as “Anzen Sen’ichi.”
As a pioneer of the industrial safety movement, we havebeen engaging in efforts to maintain and improve employee
safety and health. The spirit lives on in our Management
Philosophy of "remaining indispensable to society by always
embracing the spirit of challenge, advancing the technologies
that have underpinned the foundation of society thatoriginated in mining development."
We consider the creation of a workplace environment thatmakes work satisfying and where every employee can takeon the challenge every day of vibrantly realizing their capabilities and creating new value in good mental and physicalhealth, to be an essential management issue. Going forward,
we are committed to even more proactive efforts inpromoting measures to maintain and improve the health of
our employees.
Health Management Promotion Framework
The director of the Group in charge of human resources also has
responsibility for health promotion and takes the lead in drafting
and implementing various plans centered mainly in the Human
Resources & General Affairs Department. The person responsible
for health promotion also presents periodic reports on the statusof employee health to the Management Committee and makes
decisions on policy relating to matters such as the implementationof health management promotion.
The Human Resources & General Affairs Department coordinates health checkup data from the Health Insurance Society andthe employee database to identify health issues, and plans anddrafts appropriate measures while incorporating guidance fromindustrial physicians as well as opinions and requests from thelabor union. Implementation of measures takes place throughthose in charge of health management promotion in each department, who communicate the measures to the employees. After
implementation, information is shared with the Safety and HealthCommittee in each department, with its effectiveness also verified
and used as feedback in review of the measures taken.
◼ Health Management Promotion Framework Chart
Person responsible
for health promotion
Director in charge ofhuman resources

Management
Committee

Industrial physicians

Human Resources &General Affairs
Department

Labor Administration
Department
at each site

Furukawa Labor Union

General Safety and
Health Manager(Head Office)

Person responsible forhealth management
promotion

Furukawa Health
Insurance Society

Health Committee

General Safety and
Health Manager
Safety and
Health Committee

43 FURUKAWA CO., LTD.

In the Group's health management divisions, employee health ismanaged by periodic health checkups, special health examinations for employees with designated duties, and so on. They also
provide health guidance based on health checkup results and give
support for promoting employee health. We are also taking steps
to arrange separate in-house smoking areas based on the intent
of the Health Promotion Act, and we are making every effort toprevent secondhand smoking.
Systems and Measures
The Furukawa Company Group recognizes the following as management risks: the presence of employees with anomalies revealed
through periodic health checkups, the occurrence of employees
leaving the workplace due to injury or illness, and the presenceof employees whose ability to perform their duties is impaired
due to working while suffering from an injury or illness. With thisin mind, we are working to achieve a 100% participation rate
for regular health checkups, improve the rate of retests and thepercentage of employees participating in health programs, raiseawareness about stress in the workplace, and reduce smoking.
Realizing a Rewarding Workplace
Basic Approach
The Group employs talented individuals who will proactively takeon all challenges, while striving to recognize the diverse valuesof individuals, accordingly creating a rewarding corporate culture
wherein human rights violations and discrimination do not occur
and where individuals are evaluated fairly.
Realizing Rewarding Work Environments◼Issues and Considerations for Realizing Rewarding Work
Environments
Developing
human
resources
and usingthem properly

Develop diverse human resources based on
length of service, position, job description,ability, etc.; optimally deploy capable humanresources regardless of length of service or job
group to ensure that the right person is in theright position; set challenging personal goals
and evaluate personnel appropriately

Workstylereforms toincreaseproductivity

Improve work environments through automation and systemization; shorten and streamline
meetings; implement various workstyles, suchas flextime, teleworking, and staggered work
hours; raise awareness to improve operational
efficiency

Establishinghealthy
workplaces

Reduce annual total working hours, improve
the percentage of paid annual leave taken,
improve the percentage of scheduled medical
examinations received and actively implement
health promotion activities

About Integrated Report(Severity)
0.07

Severity*2

1.2

0.06

0.06

1.0
0.8

0.05

0.05

0.04

0.04

0.4

0

0.22
0.21

0

*3 Frequency and severity are calculated on the basis of incidents requiring
leaves of absence of at least four days.

Furukawa Company Group Sustainability Book

Safety Guidance at Overseas Business Locations
We check and provide guidance to personnel at the Group’s overseas business locations on the status of regular legally mandated
inspections of facilities, acquisition of official certifications necessary for operations, status of work instruction manuals, results ofwork environment measurements, status of safety education andemergency communication system, and details of operations of
the Safety and Health Committee. In addition to ensuring compliance with local laws and regulations, we provide guidance andadvice on how to improve work environments and management
standards so employees can work safely and comfortably. Here,
we take into account local climate and customs.
In the event of an accident or disaster, we take corrective andpreventive measures after thorough discussions with on-site persons in charge regarding the cause of the accident or disaster andmeasures to prevent recurrence.
The following business locations have acquired ISO 45001 certification, the international standard for occupational health andsafety management systems.

◼ISO 45001 Certification Acquisition Status
Company Name

Acquisition Date

Certification
Organization

Taian Furukawa UNIC
Crane Co., Ltd.

April 29, 2021

China United Certification Center (Beijing)Co., Ltd.

FURUKAWA UNIC
(THAILAND) CO., LTD.

January 25, 2023

Perry Johnson
Registrars, Inc.

Health and Safety Risk Assessments
When refurbishing facilities, installing new equipment, or
reviewing work procedures at each plant or business location, theGroup conducts risk assessments to eliminate hazardous sources
and reduce industrial health and safety risks. At overseas businesslocations, we have established a health and safety management
system based on local laws and regulations and conduct risk
assessments similar to those in Japan to prevent accidents anddisasters.

2019

0.01 0.02
0.01

0.01

0.00
2020

2021

0
2022（FY）

Financial Information

2018

5

0.03

0.43

0.2

1

Social

0.6

1.03

1

Environmental

Frequency*1

2

Governance(Frequency)
1.4

FY2022

Sustainability◼Occupational Safety Record of the Furukawa Company Group:
Frequency*1 and Severity*2 of Accidents

FY2021

Management/Business
Strategies

To prevent industrial accidents, the Group regularly holds Safety
and Health Committee meetings and carries out safety patrols at
each plant and business location. We also provide systematic education and training (including risk sensitivity improvement training)
to all employees, including managers and supervisors.
In fiscal 2022, the severity of industrial accidents decreased
compared with the previous fiscal year, but the number of occurrences (including injuries that did not result in lost time) remained
unchanged. In light of this, we are stepping up efforts to prevent
industrial accidents.
For some time now, when a work-related accident occurs, we
conduct on-site consultations with our Environmental & Safety
Management Department and related parties, then carefully
examine the details of corrective measures. In fiscal 2022, westarted analyzing the causes of previous industrial accidents that
occurred in the Group, taking into account the operating patternsof each plant and business location. We will use the informationfrom these analyses to develop preventive measures at each plantand business location.
In the past five years (fiscal 2018–2022), there have been nofatal industrial accidents involving employees of the Group or its
on-site subcontractors.

FY2020

Message from the
Finance Director

Efforts to Prevent Industrial Accidents

FY2019Message fromthe President

Basic Principles of Occupational Safety and Health &Occupational Safety and Health Policies

Number ofabsences

FY2018About the GroupThe Group strives to prevent industrial accidents and create a safeand healthy work environment (including by maintaining soundmental and physical health) in accordance with its “Basic Principles of Occupational Safety and Health” and its “Occupational
Safety and Health Policies.”
The Sustainability Promotion Meeting (chaired by the President& Representative Director), which is held annually, and the Environmental & Safety Management Committee (chaired by theGeneral Manager, Environmental & Safety Management Department) hear reports and engage in deliberation on the results ofthe previous fiscal year's occupational safety and health activities,
this fiscal year's Occupational Safety and Health Activity Targets,and other such matters.

◼Number of Incidents Requiring Leave of Absence in the
Furukawa Company Group*3

Management Philosophy
and Vision

Occupational Safety and Health Approach and Promotion
Framework*1 Accident frequency refers to the rate of occupational accidents with casualties
per one million total working hours.
*2 Accident severity refers to the number of working days lost per 1,000 total
work hours.
Integrated Report 2023

44

S: Social

Basic Approach to Human Resource Management

Human Resource Development

Premised on its fundamental policy of “what supports limitlessdevelopment of a company is people,” the Furukawa Company
Group employs talented individuals who will actively take on all
challenges, while striving to recognize the diverse values ofindividuals and accordingly creating a rewarding corporate
culture absent of human rights violations and discrimination,
where individuals are evaluated fairly.

The Group is aiming to optimize its business framework andheighten its corporate value by developing professional humanresources through human resource cultivation systems of all kinds
and by building a workplace environment where they can exercise
their capabilities to the fullest.
Relationships with Employees◼ List of Education and Training Activities
Grades 1-4(General Employees)）

Grade 5 training

Follow-up training

Pre-hiring training

Safety and health training

Conversational English education

Human rights training

Grade 6 training

Fifth-year training for corporate planning staff

Grade 8 training

Grade 4 training

Training to cultivate next-generation executives

Mental health training

Diversity training
Life plan training
Line care training

Compliance training

Training by Specialty /Function

TOEIC testing
Engineer training

Health and safety education

Job-specific training
Participation in specialized subject seminars (including those furthering acquisition of public qualifications)
Dispatch to outside educational and research institutions and academic societies

OJT

Language
Training

Language training for employees dispatched overseas
Language training (foreign language training at sites)
Short-term overseas language training

Self-Development
HR System and
Measures

Grades 5-9(Managerial Employees)

Introductory training for newly hired employees

Workplace
Education

Special Training

Employment Grade-SpecificTraining

Newly Hired Employees

Correspondence courses of all types
Introduction of instructional materials, publications, etc.
Training in the form of open applications (e-learning)
Personnel evaluator training

Coaching system
Self-assessment and interviews based on personnel evaluation system

Communication to Facilitate Training of Subordinates
Interviews are conducted between immediate supervisors andtheir subordinates on a twice-yearly basis, in addition to the daily
communication that takes place between managers and theiremployees. In the interviews, managers provide feedback to employees regarding their work, achievements, points for reflection,and findings of performance evaluations, as well as advice basedon their self-reports, and confirm and share the goals they haveset. Meanwhile, supervisors also provide their assessments withrespect to the self-analysis. The process of undergoing
45 FURUKAWA CO., LTD.

Interviews relating to goal management
Rotation and secondment to affiliates in Japan and overseas

straightforward performance assessments by their supervisors
enables employees to scrutinize themselves on a regular basis,
thereby helping fuel their motivation for proactive career development. While diverse workstyles, such as flextime, shorter/staggered work hours, hot-desking, and teleworking, are becoming
more common, it is difficult to communicate with subordinates,
understand what they are thinking, and what problems andconcerns they have. For this reason, we also conduct one-on-one
meetings at the head office .

About Integrated Report

Support for Employees Raising Children

Hiring People with Disabilities
The Furukawa Company Group promotes hiring people withdisabilities in various workplaces and for various types of work,
thereby promoting their independence and participation in society.

Given its active pursuit of overseas expansion, the Group does notbase its recruiting decisions on nationality. Moreover, we strive todeepen partnerships that transcend nationality as we promote a
spirit of mutual respect for individual differences.
Hiring Elderly Employees

Empowering Female Employees
In our ongoing effort to actively recruit and involve women, on
April 1, 2021, we formulated our Action Plan for Promoting Support for Female Employees, and are stepping up support for theadvancement of women.

Implementing Engagement Surveys◼ Action Plan for Promoting Support for Female Employees(Planned period: April 1, 2021 to March 31, 2026)
Ensure that women account for at least 20% of all new
graduate recruits

Target 2

Appoint at least 10 female managers

Target 3

Reduce the turnover rate of female employees inplanning positions for personal reasons to 10% or lessduring the first five years of employment

Relationships with Employees

Encourage use of annual paid leave (target: 12 days / year)

Senior Executive Officer
General Manager, Human Resources &General Affairs Department

Provide rewarding work environments where
employees are evaluated and treated fairly

Environmental

Message from General Manager of the Human
Resources & General Affairs Department

GovernanceTarget 4

Sustainability

Target 1

We are implementing organizational diagnostic surveys of theGroup as a whole and of each workplace systematically composed
to cover morale, corporate climate, and so on. We are collecting
and evaluating information on the degree of penetration by theManagement Philosophy and vision, on employee awareness, andon on-site views, and putting it to practical use in planning anddrafting policies of every kind.

Management/Business
Strategies

The mandatory retirement age was raised from 60 years to 65
years on April 1, 2020, in order to stabilize the employment ofelderly people and expand their opportunities for work.
Going forward, we anticipate that these people, by passing on thetechnical know-how they have acquired over many years, will proactively participate in cultivating mid-level and younger employees
as well as in other ways.

Message from the
Finance Director

The Group does not engage in any discrimination regarding human rights, beliefs, gender, disabilities, and so on in employment,
and we endeavor to provide equal opportunities for all. Because
Group businesses extend into a variety of fields, we are taking
measures to stabilize our employment by formulating staffing
and personnel plans with a clear view to business expansion andproductivity increases, including in Group companies.

Message fromthe President

Hiring Foreign Nationals

Diversity and Inclusion

About the GroupAs part of measures to support rearing of the next generation,
we have formulated and implemented a General Business Owner
Action Plan. At the same time, we are promoting improvement of
the workplace environment to make it easier for people to takepart in childcare and home care.

Management Philosophy
and Vision

Personnel Evaluation System
Based on the system of assigning grades by function that is usedin the Group, grades are set according to the magnitude of therole the employee is expected to fulfill. By assessing personnel results and behavioral characteristics in accordance with the personnel evaluation system, we are endeavoring to provide employee
guidance and cultivation, develop their capabilities, and optimize
their assignments. At the same time, this serves to provide fairand equitable treatment in terms of wages, bonuses, retirement
benefits, and so on, and in establishing an environment wherein
motivated employees can participate proactively with a sense of
security.

Atsushi Takano

Financial Information

Integrated Report 2023

SocialOne of our policies for realizing Vision for 2025 is to “Strengthen and expand our human resource bases.”
With this in mind, we aim to create rewarding work environments where employees can maximize theirabilities and create new value. To resolve social problems through its business activities, achieve sustainablegrowth, and increase corporate value, the Group must develop human resources with various personalities
regardless of nationality, race, gender, age, creed, religion, or physical ability. Accordingly, our human resource
development policy is to foster diverse human resources who can act autonomously with a spirit of embracing challenges and creating newvalue. At the same time, our in-house environmental development policy is to create comfortable work environments where diverse personnel
can perform their duties safely and efficiently while maintaining their health and fulfilling their duties.

46

S: Social

Quality Assurance
Strengthen Quality Assurance Framework

Basic Approach
Quality assurance in the Furukawa Company Group is based on
the Quality Assurance Basic Policy and the Quality Assurance
Action Guidelines. These set our basic policy as gaining the trustof our customers, providing products and services of quality thatsatisfy them, and contributing to society.
Quality Assurance Framework
The organization that engages in comprehensive deliberations
on important matters relevant to quality assurance in the Groupis the Quality Assurance Committee, which was established at
the headquarters of Furukawa Co., Ltd. In addition, the Quality
Assurance Management Department has been established in thecompany's Technology Division to manage the Group's quality
assurance framework and promote activities for quality assurance
and product safety. Each organization takes steps for coordination
while engaging the entire Group in our ongoing effort to provide
manufacturing and service that will satisfy our customers and gain
their trust.
Quality Assurance Basic Policy & Quality Assurance Action Guidelines◼ Quality Assurance Management System
President & Representative Director
Sustainability Promotion Meeting
Guidance / Instruction

Reporting Sustainability Promotion

Department(Secretariat)

Furukawa Co., Ltd.

Quality Assurance Committee
Quality Assurance Advisory Council

Quality AssuranceManagement Department(Secretariat)

Core Operating Companies

Machinery Sectional Meeting

Materials Sectional Meeting

Furukawa Industrial
Machinery Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd.
Furukawa UNIC Corporation

Furukawa Denshi Co., Ltd.
Furukawa Chemicals Co., Ltd.
Yamaishi Metal Co., Ltd.

Quality Assurance Committee
Top managers from the production departments of the core operating companies consist of the Quality Assurance Committee. Thisbody has organized the Quality Assurance Advisory Council thatbrings together those responsible for quality assurance in the core
operating companies and elsewhere. It also has organized sectional
meetings with the Advisory Council members pursuing activities
separately in the Machinery and Materials segments. Seeking toachieve solutions to the key issues defined each fiscal year, we aresharing information on measures to analyze and reduce complaints
at each site and seeking horizontal deployment of methods. We
are also promoting compliance with laws and regulations relating to manufacturing, quality assurance, and product safety, andpromoting the manufacture of products that customers can use insafety and with a sense of security. Based on the understandingthat product safety is included in quality assurance, we are also
continuously promoting risk assessment and other such activities toheighten product safety levels.
47 FURUKAWA CO., LTD.

Activity Report of Machinery Sectional Meeting
The Machinery Sectional Meeting shares information among thethree machinery-related core operating companies and promotes
comprehensive activities to provide products that meet customer
requirements and reduce claims. The products of each operatingcompany are diverse, even though they have similar mechanicalstructures. To take advantage of this diversity and reflect it in our
products, we share information and engage in continuous groupwide activities to build the best quality assurance system for eachcompany and ensure effective and efficient processes.
Under the leadership of the Quality Assurance Management
Department of the Technology Division of Furukawa Co., Ltd.,in fiscal 2022 we conducted a survey of the current status of thequality assurance systems of the three machinery-related core
operating companies and identified 10 common themes that
require focused attention. We also formulated the Quality Roadmap for Machinery Business Companies (fiscal 2023–2025),
which defines our efforts to address these 10 themes, and started
implementing the plan in the current fiscal year. Each company
is responsible for the specific themes of the roadmap. Throughmutual verification and synergistic operation of information andsystems, we are working to create a virtuous cycle of Groupwide
quality improvements.
The 10 themes are (1) engage in quality awareness activities
for all officers and employees, (2) unify the quality management
education system, (3) review the database of defect-related information and promote its utilization, (4) enhance communication(ensure timely delivery of necessary information to appropriate
departments by appropriate means), (5) ensure proper design
verification and validation, (6) establish a method for evaluating
customer satisfaction, (7) ensure stable quality of outsourced
parts, (8) identify and improve necessary quality-related competencies, (9) enhance responses to risks and opportunities, and(10) conduct regular quality audits across the board.
In addition, using digital technology at manufacturing sites isessential to achieve continuous quality improvement given theconstraints of labor shortages and increasing product complexity.
We believe that collecting and integrating quality-related datawith emphasis on validity, efficiency, and convenience will greatly
enhance our ability to address customer needs, pass on knowledge, and utilize data for processes. In parallel with the quality
roadmap, therefore, we will promote the use of digital technology
to ensure more reliable quality assurance.
Activity Report of Materials Sectional Meeting
The Materials Sectional Meeting consists of representatives of core
operating companies whose materials are widely used in electronic devices and other products. It has embraced a customer-oriented approach and set a goal of “zero complaints” and is working
to improve its quality assurance system, including for products
procured overseas.
The Sectional Meeting is working to raise the Group’s overalllevel of quality assurance by sharing the activities of materials-related core operating companies. The common challenge is reducing in-process defects. In response, we exchange informationon the root-cause investigation process, recurrence prevention
measures, and verification results regarding defects at the operating companies, and each company uses this information as areference for future activities. Even during the COVID-19 pandemic, when people’s movements were restricted, we made efforts tomaintain and strengthen the quality assurance systems of overseas
plants by conducting remote audits using webcams and othermeans. The core operating companies also use SDS*1 and otherAbout Integrated Report

Claim Responding Flow

Message from the
Finance Director

When complaints are made, the Quality Assurance Departmentsof core operating companies take the lead in immediately checking the facts, and analyzing and verifying the causes. When problems with quality are deemed to be particularly serious, thedepartments make reports to the competent authorities according to laws and regulations, disclose information to customers
through websites and other means, and promptly report thecircumstances to management; accordingly, the Group comes
together and takes swift, proper measures under the system inplace.

Management/Business
Strategies◼ Claim Responding Flow
Customers/market

Competent authority,
Affiliated groups, Recall
applications, etc.

Core Operating Companies, etc.
Sales departments,
Service departments

Public announcement
Reporting

Furukawa Co., Ltd.

Response/address the market
Quality Assurance
departments

Interaction

Interaction

Corporate Planning Department /Public & Investor Relations Section

President & Representative
Director

Instruction
Quality AssuranceCommittee

Governance

Investigation of causes /consideration ofcountermeasures
Design and development
departments, manufacturing
departments, etc.

Designation
as serious
qualityaccident(s)Reporting

Sustainability

Information from complainants

Message fromthe President*1 SDS: Safety Data Sheet*2 Failure Mode and Effects Analysis (FMEA): Systematic method ofanalysis to prevent problems by predicting their causes at the design
and process planning stages.

About the GroupThe Quality Assurance Management Department of the Tecnology Division of Furukawa Co., Ltd., provides basic quality-related
education to all officers and employees. Starting with thedefinition of “quality,” we post information summarizing thefundamentals of quality on the Group’s portal site and on bulletinboards at each plant. By increasing opportunities for officers
and employees to think about quality, we aim to increase theirawareness about the Group’s quality assurance policy and theimportance of quality assurance in their daily work. When we post
information, we also conduct surveys to help us identify the levelof understanding in each operating department, occupational category, and position, as well as issues, demands, and other mattersrelating to quality assurance in each operation. We actively use
these findings to enhance future training content and the quality
assurance systems in each
operating department.

Management Philosophy
and Vision

Cultivation of Human Resources that Support
Quality Assurance

risk assessment tools to provide information related to risk. We
view the release of defective products as a major risk and strive
to prevent such release by emphasizing change-point control andhighly reliable design and inspection automation.
With the goal of “zero complaints,” in fiscal 2023 we willcontinue striving to further improve our quality assurance system.
Here, we will deploy FMEA*2 to focus on highly reliable design,
prevent the release of defective products, and otherwise improve
our quality assurance system, including for items procured overseas. Our aim is to further raise the level of each company in the
Materials Sectional Meeting.

Quality Assurance Management Department

Environmental

Corporate Officer
Message from Chairman of the Quality Assurance
General Manager, Technology Division
Committee
General Manager, Technological Strategy Department
Chairman, Quality Assurance Committee

Tsutomu Kaneko
Pursuing maximum quality assurance inall departments to impress customers who use our products

Financial Information

Integrated Report 2023

SocialThe Quality Assurance Committee engages in various initiatives to ensure the safety and reliability of all theGroup’s products and the satisfaction of its customers. To this end, it is strengthening cooperation among thequality assurance departments of core operating companies to develop, manufacture, and deliver high-quality
products. It also works to enhance quality assurance in cooperation with all departments, including procurement, service, and sales.
In fiscal 2022, with the aim of eliminating in-process defects, we enhanced product knowledge, technology, and basic quality education, continued change-point control activities, and conducted internal quality patrols at each business location.
We also initiated reciprocating quality patrols between business locations. Going forward, each operating company will not only obtain
quality management system certification suited to its own operations but also improve the on-site capabilities of each employee. To this end,
they will engage in various improvement activities and work constantly to raise awareness about quality from the customer’s perspective.
Our aim is for all departments to pursue “product quality that impresses customers.”
48

S: Social

Innovation Management
R&D Strategies
Basic Policy for R&D Activities
The Furukawa Company Group established the Technology
Division within the head office of Furukawa Co., Ltd. The purposeof the division is to strengthen the Group’s comprehensive technological capabilities by leading the development of advanced
technologies and conducting basic research to support productdevelopment at core operating companies. The basic policies of
the Technology Division are to promote the commercialization andindustrialization of product development projects hat help resolve
social issues and also support the development of on-site capabilities to improve productivity. We have product development andproduction capabilities that are essential for our growth as amanufacturer. To utilize these as part of the comprehensive
strengths of the entire Group, the Technology Division takes thelead in formulating Groupwide technological strategies, evaluating
and managing development themes, and developing advanced
technologies.
In our Machinery business, we have developed control, information, and communication technologies earmarked for deployment in advanced fields, such as IoT and AI. In addition to using
these technologies in our products, we will apply them to our
production facilities, production management systems, and service
operations. In our Materials business, meanwhile, we are focusing
on developing battery materials that contribute to carbon neutrality (an area expected to accelerate in the future), as well as metalmaterials that will benefit our Machinery business.

Priority issues
Promoting the development of automation technology aiming
for labor saving
Development of solid electrolyte materials for solid-statebatteries and its mass production technology
Development of machinery products and technologies that
contribute to reducing environmental impact through theirhigher efficiency and lighter weight
Effectively utilizing digital technologies
Strengthen training of next-generation engineers through full-scale
operation of engineer human resource development program

Status of Research and Development Investment
Research and development expenses in fiscal 2022 totaled ¥1.51
billion. The core operating companies and the Technology Division
promoted the development of new products and new technologies for the resolution of social issues, including contributions
toward labor saving and carbon neutrality.

◼ Research and Development Expenses and Ratios by
Operating Companies
Technology Division(Materials)

Technology Division(Machinery)

31%

18 %

Chemicals segment

Industrial Machinery
segment

14%

Electronics
segment

7%
Metals segment

0%
Materials Business 52%
49 FURUKAWA CO., LTD.

1.51

billionFY2022

1%

Rock Drill Machinery
segment

10 %UNIC Machinery
segment

19 %Machinery Business 48%

R&D System
The Company has established the Development Committee todeliberate on new technology and new product development in
the Group. The Committee is chaired by the President & Representative Director, and the Technological Strategy Department of
the Technology Division serve as the secretariat. Meeting twice
per year as a rule, various issues are deliberated, including theselection of research and development and product development
themes, confirmation of the status of progress on research.
The Technology Division stands at the center of the development frameworks that function to strengthen the Group's comprehensive technological capabilities.It proceeds with researchand development while coordinating closely with the Group companies that are the main entities in product development in fields
ranging from materials to machinery and equipment.

◼Development Framework Chart
President & Representative Director
Development Committee

Furukawa Co., Ltd.

(Secretariat)
Corporate Planning Department
Technological Strategy
Department of Technology Division

Core Operating Companies

Technology DivisionInteraction
・Technological Strategy
Department
・Advanced Technology
Department
Development
・Material Research &Support andDevelopment Department
Initiative・Quality AssuranceManagement Department
・Intellectual Property
Department

Furukawa Industrial Machinery
Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd.
Furukawa UNIC Corporation
Furukawa Denshi Co., Ltd.
Furukawa Chemicals Co., Ltd.

Main Entities in Research andDevelopment Activities

Main Entities in ProductDevelopment Activities

Intellectual Property Strategies
Basic Policy for Intellectual Property Activities
The Group considers intellectual property (IP) activities as animportant part of its management strategy and has establisheda system to utilize IP-related information to secure a competitive
advantage. Based on the rights to the Group’s technology, we willappropriately assess the value of our entire business, including ourIP assets.

Priority issues
Engage in activities related to IP rights (discovery, rights
acquisition, maintenance, utilization) to visualize evaluation oftechnological capabilities
Assess the value of rights held to ensure their effective utilization
Collect and analyze patent information to formulate a corporate strategy

About Integrated Report

Technology Division(Materials)

Interaction &Promotion

Interaction

Technology Division
Advanced Technology
Department
Material Research &Development Department

OthersIntellectual Property
Department

Core Operating
Companies
Core Operating
Companies

Machinery Business 68%

Effective Deployment of IP Landscaping
In the process of adopting IP landscaping, we have positioned thetwo-year period beginning in April 2023 as a phase for fosteringcommon understanding, with the aim of launching a promotion
project. One specific initiative is the introduction of IP training forinternal use. This training is intended not only for R&D departments but also for the sales and manufacturing departments. In
addition to improving the IP literacy of employees, it will lay thegroundwork for the future integration of business and IP strategies.

◼ Introduction Flow of IP Landscape
FY2022

FY2023
Launch Promotion
project
Foster common
understanding

FY2025
Start Operation
Top-down

IP landscaping: This entails performing analyses that incorporate
IP information into management and business information whendefining a company’s management and business strategies. The
results of such analyses (overview of current situation, future
prospects, etc.) are shared with executives and business managers, who provide feedback that is used in discussions and consultations for planning and consideration.
(Source: Japan Patent Office website)

Intellectual Property
Department

Intellectual
property
information

28 %Financial Information

Business
StrategyIntellectual
Property
Strategy1%Socialproperty
Business
information
Strategy
The Ideal StateIntellectual
We seek to unify business strategy
and intellectual property strategy
Propertyinformation as an importantby incorporating intellectual property
Strategy
element in the formulation of business strategy. The core operatMedium-TermBusiness Plan,
ing companies and the Intellectual
Property Department
also treat
Core
Operating
ActionPlananalysis
Development
businessanalysisand intellectual
propertyas an inseparable
Companies
Committee,
Product
whole, and share the results ofDevelopment
analysis with eachother.
Committee
In other words, from the current state, in which intellectual
PatentApplication
Targetproperty strategy
is ledby the core
operating companies, we willtransition
toward Property
a strategy that combines business strategy andIntellectual
Formulate
IP activityefforts of theintellectualDepartment
property strategy throughthe cooperative
core operating companies and the Intellectual Property Department.
Combining

UNIC Machinery
segment

Environmental

Business
information

20 %

1%
Furukawa C&F

Upskill

Formulate IP activity

10 %Rock Drill Machinery
segment

FY2022

Electronics segment

Surveys/Research

Patent Application Target

Intellectual

590

1%

GovernanceMedium-Term Business Plan,
Action Plan Development
Committee, ProductDevelopment Committee

Combining

Chemicals segment

Sustainability

The Intellectual Property Department supports the acquisitionof rights on the basis of business strategies formulated by thecore operating companies.
In the core operating companies, patent application targets are determined in development plans formulated on thebasis of medium-term business plans and action plans. The
Intellectual Property Department seeks to achieve these patentapplication targets by prioritizing the placement of humancapital in key fields while broadly supporting the Group as awhole.

Business
information

10 %Industrial Machinery
segment

Management/Business
Strategies

Current Situation

Intellectual Property
Department

29%

Materials Business 32%

Intellectual Property Strategy

Core Operating
Companies

Technology Division(Machinery)

Message from the
Finance Director

Patent OfficeCore Operating Companies
Furukawa Industrial Machinery
Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd.
Furukawa UNIC Corporation
Furukawa Denshi Co., Ltd.
Furukawa Chemicals Co., Ltd.

Message fromthe President

Technology Division
Intellectual Property
Department

Patent manager◼ Intellectual Property
Management Framework Chart

About the Group◼ Number of Domestic Intellectual Properties Owned byOperating Companies

Intellectual Property Portfolio
In fiscal 2022, we owned 590 intellectual properties in Japan.
In the Machinery business, the core operating companies are themain actors in development, and they own the intellectual property
relating to products. In the Materials business, a larger percentage
is owned by the Technology Division, which is the division forbasic research oriented toward commercialization of new material
development with an eye to the future.

Management Philosophy
and Vision

Intellectual Property Management Framework
The Intellectual Property Department, located within the Technology Division, is the core organization that manages the IP of theGroup. Each research center and business location of the Company and its core operating companies also has a patent manager
who serves as a coordinator between inventors and the Intellectual Property Department. In addition, the Intellectual Property
Department and patent management staff of relevant businessdepartments work closely together to promote IP activities as agroup.

Integrated Report 2023

50

S: Social

Supply Chain Management
Basic Approach
The Basic Procurement Policies of the Furukawa Company Group
have the four pillars of the principles of fairness and impartiality,
mutual prosperity, compliance and confidentiality, and promotionof procurement activities that are considerate of CSR. In accordance with these policies, and on the assumption of cooperative
relationships with suppliers, CSR Promotion Guidelines have beenformulated that call for respect for human rights and the environment.
Basic Procurement Policies
CSR Promotion Guidelines

Promoting CSR Activities in the Supply Chain
The Group's procurement departments consider it essential tohave cooperative relationships not only within the Group but alsowith suppliers and others throughout the supply chain. In fiscal
2016, therefore, we began providing suppliers, including new
suppliers, with an explanation of the purpose of the Group's CSR
procurement and giving them the supplier CSR survey to complete. In fiscal 2019, we visited three suppliers and exchanged
views in order to promote understanding of our CSR activities.
Considering the points for reflection yielded by the initial survey, a second round of supplier CSR surveys has been conductedfrom fiscal 2021. In order to promote these CSR activities that
extend to the supply chain, and to maintain and improve them,
we have been moving through the PDCA cycle for the processfrom conducting supplier CSR surveys to following up on them.
Going forward, we will further enhance the content of thequestionnaire related to human rights and the environment tomake our activities more SDGs-conscious.
Purchasing Strategy Conferences
Our Purchasing Department holds Purchasing Strategy Conferences twice a year, which consist of responsible personnel fromPurchasing Departments of Machinery segment core operatingcompanies.
At these conferences, each operating company's progress
toward annual targets is checked and exchanges of views are held
for the resolution of issues, with the overall purpose of promoting
procurement activities based on the Furukawa Company Group
Basic Procurement Policies.
For fiscal 2022, the core issue for the Purchasing Departments
in Vision for 2025 was the fostering of partnerships. Toward that
end, steps were taken to strengthen supplier management, con-duct specific examinations relating to CSR procurement in
the Purchasing Departments, and engage in exchanges of views.
Regular monthly meetings are also held separately at each
operating company to provide occasions for more specificexamination of initiatives in accordance with the policies of thePurchasing Strategy Conference. In addition, meetings are held
on individual projects as the occasion arises and activities moreclosely tailored to circumstances are carried out.
Supplier Risk Evaluation
In fiscal 2022, we conducted our second supplier CSR survey,
this time targeting 40 major Group 2*1 suppliers (survey of 101
Group 1*2 suppliers was conducted in fiscal 2021), and achieved
a 100% response rate.
We also analyzed and evaluated the results of the survey of
101 Group 1 suppliers conducted in fiscal 2021 by tabulating thescores allocated according to the importance of each question. As
a result, we identified, visited, and exchanged opinions with two
suppliers that were considered high risk.
In fiscal 2023, we will conduct follow-up monitoring activities(including on-site inspections and guidance on risk reduction)
based on the risk evaluation of Group 2 suppliers.
*1 Group 2: Furukawa Chemicals Co., Ltd.; Furukawa C&F Co., Ltd.; Ashio		Rock Drill Co., Ltd.; FRD Iwaki Co., Ltd.
*2 Group 1: Furukawa Industrial Machinery Systems Co., Ltd.; Furukawa
		Rock Drill Co., Ltd.; Furukawa UNIC Corporation; Furukawa
Denshi Co., Ltd.

Questions on the Supplier CSR Survey (Human Rights,
Environment, etc.)[Survey questions about respecting human rights and preventing
human rights violations](1) Prohibition of child labor, forced labor, unfairly low wages, etc.
(2) Creating work environments free of discrimination and		 harassment of employees(3) Compliance with labor laws and regulations, improving
		 work environments[Survey questions about environmental conservation](1) Compliance with international standards, laws, regulations,		 agreements, etc., related to environmental conservation(2) Energy-saving considerations, using resources effectively,
		 reducing waste(3) Proper control of chemical substances in products and		 chemical substances discharged into the external
		 environment during manufacturing processes◼ Report of Supplier CSR Survey
FY2016–2018

FY2019FY2020

FY2021

FY2022
2nd round
40 major suppliers(out of roughly
650 of Group 2)
100% collected and analyzed
F ollow-up on 2 suppliersof Group 1 (no problems)
Follow-up on Group 2,
to be conducted in FY2023

Number of
suppliers towhich thesurvey wasadministered

1st round
154 major suppliers(out of roughly 1,000)

100%
collected―

2nd round
101 major suppliers(out of roughly
1,000 of Group 1)
100% collected and analyzed

Number of
suppliers
followed up―

3 companies(no problems)

None

None

51 FURUKAWA CO., LTD.

About Integrated Report

Providing Technical Guidance to Suppliers

Consideration in the
Procurement of Copper Ore

FRD production briefing

Governance
Environmental

Further deepening partnerships with suppliers toencourage sustainability-driven procurement activities

Sustainability

Message from General Manager of the Purchasing
Department

Management/Business
Strategies

Gibraltar Copper Mine

Giving guidance to a supplier

Message from the
Finance Director

As raw material for the copper ingots that are the main productof Furukawa Metals & Resources Co., Ltd., as well as for the goldand silver bullion that are its by-products, that company procurescopper concentrate from mines in Chile, Peru, Canada, the UnitedStates, Australia, Indonesia, Papua New Guinea, and other places.
The Company ascertains the actual circumstances at these
supplier mines with regard to environmental protection, humanrights, employment and labor problems, and so on, and notes
if sustainable development and appropriate mine operation arebeing carried out, thereby contributing to mitigation of environmental impact on a global scale.
Regarding conflict minerals, the Company also has the policy of
not procuring minerals produced in areas
where procurement
would risk furtheringconflict by serving asa source of funds forarmed groups andhuman rights violations.

Message fromthe President

In order to continue to maintain trust in the Group’s products,
we must maintain trust not only in the Company itself but also
in the level of procured goods. Therefore, it is vital to survey,
instruct, and manage suppliers—our partners—as to the quality of
their products in addition to human rights, environmental issues,
safety, and other aspects. Our Purchasing Department is cooperating with core operating companies in the Machinery segment(Furukawa Industrial Machinery Systems Co., Ltd., Furukawa Rock
Drill Co., Ltd., Furukawa UNIC Corporation) to offer guidance andrecommendations support to suppliers as necessary.
In fiscal 2022, as the impact of COVID-19 began to dissipate,
we resumed monitoring and providing guidance to our domestic
suppliers in the usual manner. We also resumed visits of overseas
suppliers to confirm and provide guidance on manufacturing
processes, parts management, quality inspection systems,
environmental and safety measures, and technical matters, which
had previously been conducted through web conferences.

The Group considers suppliers to be important partners in aiming
for mutual development.
In fiscal 2022, as the pandemic subsided, we resumed visits todomestic and overseas
suppliers to communicate with them.
In fiscal 2023, we
will continue deepening mutual understanding through CSR
initiatives and while
fostering closer relationships of trust.

About the Group

Our Purchasing Department is constantly striving to strengthen
the procurement system by holding seminars for the department
members.
Themes of training include human rights, the environment,
quality, and more, and the information is shared on a regularbasis.

Strengthening Relations with Major Suppliers: Fostering
Partnerships

Management Philosophy
and Vision

Training Personnel Responsible for Procurement

Associate Officer
General Manager,
Purchasing Department

Naoki Ikeda

Financial Information

Integrated Report 2023

SocialIn fiscal 2022, we conducted our second CSR survey (our first was in fiscal 2021), targeting roughly 40 suppliers of Furukawa Chemicals Co., Ltd. (a core operating company) and its three affiliates. As a result, we
confirmed that everyone understands our guidelines as they did in the previous fiscal year.
We have now conducted CSR surveys of approximately 140 companies, including those surveyed in fiscal
2021. During the year, we also visited some of the suppliers who responded to the CSR survey as planned,
exchanged opinions, and otherwise engaged in close communication. We would like to thank all of our suppliers for their cooperation.
As part of our sustainability-oriented procurement activities, in fiscal 2023 we plan to conduct a survey on the purchasing status of SDGsconscious parts at our three machinery-related core operating companies. We will continue deepening partnerships with our suppliers toachieve mutual prosperity and contribute to society throughout our supply chain.
52

Financial Information
Consolidated 11-Year Data

Financial Data
2013/3

2014/3

2015/3

2016/32017/3For the year: (Millions of yen)
Net sales¥165,539¥163,026¥172,544¥161,799¥149,829

Cost of sales

144,224

139,777

146,657

136,447

126,207

Gross profit

21,31523,24925,88625,352

23,622

Selling, general and administrative (SG&A) expenses

17,952

16,362

16,961

17,363

17,076

Operating profit

3,363

6,886

8,925

7,988

6,545

Ordinary profit

2,763

6,150

6,603

6,227

7,202

Profit before income taxes

5,432

7,091

6,160

6,631

6,711

Profit attributable to owners of parent

2,976

3,976

9,793

5,056

4,254

Cash flows from operating activities

5,491

1,982

10,241

7,652

9,818

Cash flows from investing activities(2,252)(3,129)(10,892)(2,855)(3,585)

Cash flows from financing activities

251(4,562)

3,318(8,166)(5,030)Capital investment

2,926

11,430

2,557

2,869

5,424

Depreciation
Research and development expenses

3,014
2,558

2,828
2,538

3,223
2,227

3,190
2,680

3,137
2,464

At year-end: (Millions of yen)
Total assets¥186,076¥199,408¥207,317¥195,650¥208,034

Current assets

79,507

76,83980,56476,314

79,578Current liabilities

74,43973,97663,87059,74959,790Net assets

51,50756,31370,581

68,262

79,584

Interest-bearing debt
Equity80,634
50,11077,21954,69482,05368,78376,241
66,45973,50777,658For the year: (Millions of yen)Segment performance

2013/3

2014/3

2015/3

2016/32017/3

Net sales of Machinery¥ 56,852¥ 71,111¥ 75,990¥ 72,232¥ 66,803

Industrial

12,894

18,527

16,712

14,926

14,041Rock Drill

23,305

26,84230,91030,076

26,979UNIC

20,651

25,741

28,36727,22925,782

Net sales of Materials

88,026

90,162

93,27085,64478,968

Metals

77,94478,68481,51374,192

67,853

Electronics

4,987

5,381

5,743

5,477

5,816

Chemicals

5,093

6,096

6,013

5,973

5,298

Net sales of Real Estate

1,058

1,013

2,535

3,045

3,074

Operating profit (loss) of Machinery

2,923

5,333

6,551

5,882

3,580

Industrial

778

1,851

1,711

1,037

104

Rock Drill

(67)

341

1,225

2,217

897

2,212

3,141

3,614

2,627

2,578

UNIC
Operating profit (loss) of Materials

324

1,695

1,770

983

1,870

Metals

282

1,503

1,449

1,154

1,738

Electronics

(262)

(123)

52

(368)

17

Chemicals

304

315

267

197

114

219

(43)

776

1,276

1,265

Operating profit (loss) of Real Estate

53 FURUKAWA CO., LTD.

About Integrated ReportManagement Philosophy
and Vision

Financial Data
2021/32022/32023/3For the year: (Millions of yen)
Net sales¥167,695¥174,116¥165,215¥159,702¥199,097¥214,190

Cost of sales

142,426

147,674

138,940

137,508

172,995

185,575

Gross profit

25,26826,441

26,27522,194

26,101

28,615

Selling, general and administrative (SG&A) expenses

17,447

17,526

17,582

16,601

18,366

19,583Operating profit

7,820

8,915

8,693

5,592

7,734

9,031

Ordinary profit

8,105

8,235

8,135

6,773

8,996

9,348

Profit before income taxes

6,594

7,003

7,280

9,907

9,137

8,506

Profit attributable to owners of parent

4,774

4,654

4,431

7,468

6,477

6,211

Cash flows from operating activities

5,351

11,785

8,400

6,042

8,768

6,148

Cash flows from investing activities(5,855)(3,386)(5,073)

2,245(5,857)(1,617)

Cash flows from financing activities(2,529)(4,205)(4,843)(3,123)(6,568)(5,934)

Capital investment

5,021

5,442

5,938

4,144

4,778

4,187

Depreciation
Research and development expenses

3,260
2,292

3,473
1,504

3,589
1,177

3,879
1,164

4,003
1,336

4,114
1,508

¥215,368¥209,697¥218,275¥229,727¥232,745

87,84587,44185,72588,62596,23899,882Current liabilities

79,32260,37652,55547,83959,85963,111

Net assets

87,08680,447

77,966

94,364

100,075

106,050

Interest-bearing debt
Equity73,31185,011

72,597
78,21670,41275,543

69,683
91,77065,671
97,25362,848102,946

For the year: (Millions of yen)Segment performance

2018/3

2019/32020/32021/32022/32022/3

Net sales of Machinery¥ 77,580¥ 82,691¥ 68,635¥ 76,938¥ 81,658

15,871

17,971

23,237

16,682

17,723

17,943

Rock Drill

30,19930,372

27,66324,14930,91035,752

UNIC

27,381

29,23731,79127,80428,30527,961

92,722

79,366

88,203

118,163

126,804

77,33480,067

67,14976,094

102,995

111,424

Electronics

6,307

6,527

5,506

5,741

7,271

6,926

Chemicals

6,127

6,710

6,367

7,896

8,454

3,338

2,999

2,386

2,107

2,115

2,056

Operating profit (loss) of Machinery

5,083

6,567

7,343

3,968

4,679

6,093

Industrial

1,005

2,088

3,208

2,113

1,396

1,515

Rock Drill

1,782

1,689

142

(1,324)  1,117

3,030

UNIC

2,295

2,789

3,992

3,180

2,165

1,547

1,396

776

1,040

2,349

2,309

867

581

301

499

940

1,276

Electronics

330

407

(35)

161

666

500

Chemicals

451

406

510

380

743

532

1,339

1,163

735

736

743

835

Operating profit of Real Estate

Integrated Report 2023

54

Financial Information

1,648

MetalsOperating profit (loss) of Materials

Social6,344

Net sales of Real Estate

Environmental

89,987

Metals

Net sales of Materials

Governance¥ 73,453

Industrial

Sustainability¥222,211

Current assets

Management/Business
Strategies

At year-end: (Millions of yen)
Total assets

Message from the
Finance Director

2020/3Message fromthe President

2019/3

About the Group

2018/3

Consolidated 11-Year Data
Financial Analysis Data
2013/3Per share amounts: (Yen) (Note 1)
Basic earnings
Cash dividends
Net assets

2014/3

2015/3

2016/32017/3¥   73.65 ¥   98.40 ¥  242.34 ¥  125.13 ¥  105.29
20.00
30.00
50.00
50.00
50.00
1,239.94 1,353.41 1,702.21 1,644.81 1,922.04

Profitability: (%)
Cost of sales margin
Gross margin
SG&A expense margin
Operating margin
Ordinary margin
Return on sales

87.1
12.9
10.8
2.0
1.7
1.8

85.7
14.3
10.0
4.2
3.8
2.4

85.0
15.0
9.8
5.2
3.8
5.7

84.3
15.7
10.7
4.9
3.8
3.1

84.2
15.8
11.4
4.4
4.8
2.8

Efficiency and soundness:
Return on equity (ROE) (%) (Note 2)
Return on assets (ROA) (%) (Note 3)
Debt-to-equity (D/E) ratio (Times) (Note 4)
Interest-bearing debt/EBITDA ratio (Times) (Note 5)
Equity-to-asset ratio (%) (Note 6)
Total asset turnover (Times) (Note 7)

6.2
1.6
1.6
12.6
26.9
0.9

7.6
2.1
1.4
7.9
27.4
0.8

15.9
4.8
1.2
6.8
33.2
0.8

7.5
2.5
1.1
6.8
34.0
0.8

5.9
2.1
0.9
7.6
37.3
0.7

Investment indicators:
Dividend payout ratio (%) (Note 8)
Consolidated total return on equity (%) (Note 9)Strategic shareholdings ratio (%) (Note 10)
Price book value ratio (PBR) (Times) (Note 11)
Stock price at fiscal year-end (Yen)Market capitalization (Millions of yen)

27.2
1.7
45.2
0.9
1,090
44,085

30.5
2.3
52.5
1.4
1,860
75,228

20.6
3.3
49.7
1.2
2,120
85,744

40.0
3.0
42.4
1.0
1,660
67,139

47.5
2.8
49.0
1.1
2,050
82,913

CO emissions (Thousand t) (Note 12)
Drain volume (Thousand m3)
Total emissions including waste, etc. (t)Valuables
Waste
Energy (Thousand GJ)
Water resources (Thousand m3)

24
448
6,389
2,567
3,822
461
641

23
429
7,746
3,003
4,743
454
633

27
455
6,266
3,168
3,098
474
651

24
471
6,832
3,374
3,458
429
666

25
465
5,347
2,489
2,858
458
671

Number of directors (Persons)
Number of outside directors (Persons)
Number of employees (Persons)
Number of female employees (Persons) (Note 13)
Total actual working hours (Hours)
Overtime hours (monthly average) (Hours)

8
1
2,342
—
2,030
19.00

8
1
2,413
—
2,075
25.50

7
1
2,456
—
2,136
26.27

8
2
2,521
283
2,105
23.80

9
3
2,616
359
2,064
20.65

7,855
83.10
90,387
96,7897,104100.2487,767
94,966

6,554
109.9390,447
96,6755,215
120.1386,466
94,3275,154
108.42
84,062
91,294

ESG Data
2

Other Data
LME copper price (average; US$/ton)
JPY rate per US$ (average for fiscal year)
Copper production volume (Tons)
Copper sales volume (Tons)

Notes:	  1.	The Company conducted a 1-for-10 stock consolidation of shares of common stock, effective October 1, 2017. In the above table, per-share figures for fiscal
2017 and prior years have been recalculated based on the number of shares outstanding after the stock consolidation.
	  2.	Return on equity (ROE) = (Profit attributable to owners of parent / Average equity) × 100
	  3. Return on assets (ROA) = (Profit attributable to owners of parent / Average total assets) × 100
	  4.	Debt-to-equity (D/E) ratio = Interest-bearing debt (fiscal year-end) / Equity (fiscal year-end)	  5. Interest-bearing debt/EBITDA ratio = Interest-bearing debt (fiscal year-end) / (Operating profit + Depreciation)

55 FURUKAWA CO., LTD.

About Integrated ReportManagement Philosophy
and Vision

Financial Analysis Data
2018/32020/32021/32022/3¥  118.16 ¥  116.23 ¥  112.23 ¥  190.73 ¥  165.87
50.00
50.00
50.00
50.00
50.00
2,104.07 1,978.09 1,926.32 2,348.53 2,505.01

2023/3¥  161.97
50.00
2,700.87
86.6
13.4
9.1
4.2
4.4
2.9

Efficiency and soundness:
Return on equity (ROE) (%) (Note 2)
Return on assets (ROA) (%) (Note 3)
Debt-to-equity (D/E) ratio (Times) (Note 4)
Interest-bearing debt/EBITDA ratio (Times) (Note 5)
Equity-to-asset ratio (%) (Note 6)
Total asset turnover (Times) (Note 7)

5.9
2.2
0.9
6.6
38.3
0.8

5.7
2.1
0.9
5.9
36.3
0.8

5.8
2.1
0.9
5.7
36.0
0.8

8.9
3.5
0.8
7.4
42.0
0.7

6.9
2.9
0.7
5.6
42.3
0.9

6.2
2.7
0.6
4.8
44.2
0.9

Investment indicators:
Dividend payout ratio (%) (Note 8)
Consolidated total return on equity (%) (Note 9)Strategic shareholdings ratio (%) (Note 10)
Price book value ratio (PBR) (Times) (Note 11)
Stock price at fiscal year-end (Yen)Market capitalization (Millions of yen)

42.3
2.5
51.8
0.9
1,985
80,284

43.0
3.9
43.6
0.7
1,393
56,340

44.6
3.1
36.0
0.6
1,060
42,872

26.2
2.5
39.4
0.6
1,336
52,205

30.1
2.4
38.0
0.5
1,289
50,043

30.9
2.8
35.1
0.5
1,277
48,674

CO emissions (Thousand t) (Note 12)
Drain volume (Thousand m3)
Total emissions including waste, etc. (t)Valuables
Waste
Energy (Thousand GJ)
Water resources (Thousand m3)

26
410
6,884
2,928
3,956
483
623

26
477
7,160
3,357
3,803
511
692

22
477
7,039
3,203
3,836
438
680

21
474
5,912
2,456
3,456
427
671

22
417
6,347
3,045
3,302
472
618

20
361
6,459
3,046
3,413
410
568

Number of directors (Persons)
Number of outside directors (Persons)
Number of employees (Persons)
Number of female employees (Persons) (Note 13)
Total actual working hours (Hours)
Overtime hours (monthly average) (Hours)

9
3
2,690
391
2,138
26.85

9
3
2,757
415
2,117
25.40

9
3
2,755
411
2,083
22.36

9
3
2,752
413
1,952
15.22

9
3
2,804
437
1,986
18.80

9
3
2,831
462
1,943
16.64

6,444
110.8588,004
90,1036,341
110.91
81,34685,1465,860
108.7477,06883,8636,879
106.0674,38681,9989,691
112.3871,14977,4028,551
135.4770,186
74,070ESG Data
2

Environmental

86.9
13.1
9.2
3.9
4.5
3.3

Governance

86.1
13.9
10.4
3.5
4.2
4.7

Sustainability

84.1
15.9
10.6
5.3
4.9
2.7

Management/Business
Strategies

84.8
15.2
10.1
5.1
4.7
2.7

Message from the
Finance Director

84.9
15.1
10.4
4.7
4.8
2.8

Message fromthe President

Profitability: (%)
Cost of sales margin
Gross margin
SG&A expense margin
Operating margin
Ordinary margin
Return on sales

About the GroupPer share amounts: (Yen) (Note 1)
Basic earnings
Cash dividends
Net assets

2019/3

Other Data

12. Not including Scope 3
13.	For number of female employees, only figures forfiscal 2015 and later are shown because numbersof male and female employees were not counted
in some ­categories before then.
Integrated Report 2023

56

Financial Information

	  6.	Equity-to-asset ratio = [Equity (fiscal year-end) / Total assets (fiscal year-end)] × 100
	  7. Total asset turnover = Net sales / Average total assets
	  8. Dividend payout ratio = (Total cash dividends / Profit attributable to owners of parent) × 100
	  9.	Consolidated total return on equity = [(Total cash dividends + Total amount of treasury stock acquisition) /Average consolidated equity] × 100
10. Ratio of strategic shareholdings shares (including deemed shares) to consolidated net assets
11. Price book value ratio (PBR) = Stock price (fiscal year-end) / Net assets per share

SocialLME copper price (average; US$/ton)
JPY rate per US$ (average for fiscal year)
Copper production volume (Tons)
Copper sales volume (Tons)

Financial Information
Management’s Analysis of Operating Results, Financial Position, and Cash Flows	Accounting Principles and Change in Fiscal Year
Notation
As a company listed on the Prime Market of the Tokyo Stock
Exchange, since April 2022 we have been translating and publishing financial statements and other materials into English for timely
disclosure. For financial statements and other information in thisreport, therefore, we use the English translation of our financial
statements, which are based on Japanese generally accepted
accounting principles (Japanese GAAP). Those financial statements(based on Japanese GAAP) have been properly audited by the firmthat audited the Company’s Annual Securities Report.
Starting with this year’s Integrated Report, we have changed theEnglish notation of “fiscal year” to match the Japanese-language
report. Accordingly, the period from April 2022 to March 2023
is now referred to as “fiscal 2022.” Similarly, the period from
April 2021 to March 2022 is now referred to as “fiscal 2021.”
Please note that this differs from the fiscal year notation in theprevious year’s Annual Report.

Operating Results
In fiscal 2022, ended March 31, 2023, consolidated net sales
amounted to ¥214,190 million, up ¥15,093 million (7.6%) year
on year, and operating profit totaled ¥9,031 million, up ¥1,297
million (16.8%). As a result, the operating margin increased
0.3 point, to 4.2%. In the Machinery business, the Industrial
Machinery and Rock Drill Machinery segments reported increases
in both sales and profit, but the UNIC Machinery segment posted
decreases in sales and profit, resulting in higher sales and profit
for the Machinery business as a whole. In the Materials business,
the Metals segment reported increases in sales and profit, theElectronics segment posted decreases in sales and profit, andthe Chemicals segment recorded higher sales and lower profit,
resulting in higher sales and lower profit for the Materials businessas a whole. The Real Estate business reported lower sales andhigher profit.
Non-operating income increased ¥101 million year on year, to¥3,146 million, due to foreign exchange gains of ¥1,462 million(up ¥785 million). Non-operating expenses rose ¥1,047 million, to¥2,829 million, mainly due to share of loss of entities accounted

Net Sales (Billions of yen)

174.1 165.2

199.0

Industrial Machinery
Sales in the Industrial Machinery segment amounted to ¥17,943
million, an increase of ¥220 million year on year, and operating
profit was ¥1,515 million, an increase of ¥118 million. The orderbacklog at year-end was higher than a year earlier due to orders
received related to highway bridges and stone crushing plants,
etc. Sales of pump plants, environmental products, and bridge
structures increased, while those of material machinery decreased.
Regarding large-scale projects, we recorded sales corresponding
to progress, including of SICON® enclosed hanging conveyors for

Profit Attributable to
Owners of Parent (Billions of yen)
Return on Sales (%)

Operating Profit (Billions of yen)
Operating Margin (%)

Industrial Machinery
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

214.1

159.7

8.9

8.6

5.1

'19/3 '20/3 '21/3 '22/3 '23/3

5.3

7.7

9.0
7.4

5.5
3.5

3.9

4.2

'19/3 '20/3 '21/3 '22/3 '23/3
Operating Profit
Operating Margin

57 FURUKAWA CO., LTD.

for using equity method of ¥860 million (share of profit of entities
accounted for using equity method of ¥370 million in the previous
fiscal year). As a result, ordinary profit increased ¥351 million(3.9%), to ¥9,348 million.
Despite a ¥362 million gain on sales of investment securities (up¥269 million year on year) and other items, extraordinary income
declined ¥703 million (63.1%) year on year, to ¥410 million. Thiswas due to a gain on bargain purchase of ¥833 million in theprevious fiscal year associated with the acquisition of shares in
Yamaishi Metal Co., Ltd. on October 1, 2021. Extraordinary losses
rose ¥279 million (28.7%), to ¥1,252 million, due to a ¥324
million loss on liquidation of subsidiaries (in Panama and China) in
the Rock Drill Machinery segment (reported as a loss on liquidation of subsidiaries), as well as a ¥470 million loss corresponding
to progress of demolition work on the Furukawa Osaka Building(¥668 million loss in the previous fiscal year). As a result, profit
before income taxes decreased ¥630 million (6.9%), to ¥8,506
million.
Total income taxes (including enterprise tax, inhabitants’ tax,
and business tax) decreased ¥401 million, to ¥2,049 million. The
effective tax rate was 24.1%, down 2.7 points from the previous
fiscal year, mainly due to adjustments from retained earnings ofsubsidiaries (–7.8%). Profit attributable to non-controlling interests increased ¥36 million, to ¥245 million. As a result of theabove, profit attributable to owners of parent declined ¥266
million (4.1%), to ¥6,211 million.
Return on equity (ROE) declined 0.7 point, to 6.2%. Basicearnings per share was down 2.4%, to ¥161.97.

4.6
2.7

4.4
2.7

4.7

6.4
3.3

6.2

23.2
3.2
17.9
16.6 17.7
2.0

2.1

2.9

'19/3 '20/3 '21/3 '22/3 '23/3
Profit Attributable to Owners of Parent
Return on Sales

1.3

17.9
1.5

'19/3 '20/3 '21/3 '22/3 '23/3
Net Sales
Operating Profit

About Integrated Report

27.6

1.6

30.9

31.7

29.2

3.9

27.8 28.3

27.9

3.1

24.1

6.5
2.1
1.5

0

68.6

3.9

76.9

6.0

67.1

1.2
0.5

'19/3 '20/3 '21/3 '22/3 '23/3
Net Sales
Operating Profit'19/3 '20/3 '21/3 '22/3 '23/3
Net Sales
Operating Profit

76.0

0.3

0.4

0.9

'19/3 '20/3 '21/3 '22/3 '23/3
Financial Information

Net Sales
Operating Profit (Loss)

80.0

111.4

4.6

(1.3)
'19/3 '20/3 '21/3 '22/3 '23/3

102.9

81.6

Social

2.7

1.1

0.1

82.6
7.3

77.5

MetalsNet Sales (Billions of yen)
Operating Profit (Billions of yen)

Environmental

30.3

35.7
3.0

Machinery Business
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

GovernanceRock Drill Machinery
UNIC Machinery
Net Sales (Billions of yen)
Net Sales (Billions of yen)
Operating Profit (Loss) (Billions of yen) Operating Profit (Billions of yen)

Sustainability

Machinery Business Total
Total sales of the Machinery business—consisting of the Industrial
Machinery, Rock Drill Machinery, and UNIC Machinery segments—
amounted to ¥81,658 million, an increase of ¥4,719 million year
on year, and operating profit was ¥6,093 million, an increase of¥1,414 million.

Management/Business
Strategies

Chemicals
Sales in the Chemicals segment amounted to ¥8,454 million, an
increase of ¥557 million, while operating profit was ¥532 million,a decrease of ¥210 million. Sales of cupric oxide decreased year
on year due to a decline in demand related to PCs and lower sales
volumes. This was despite higher unit prices stemming mainly
from rising copper prices. Meanwhile, sales of cuprous oxide
increased on the back of a recovery in demand for ship-bottom
paints, a major application for that product, as well as higher unit
prices, mainly due to increasing copper prices. On the other hand,segment operating profit declined due to higher manufacturingcosts caused by soaring raw material costs and other factors.

Message from the
Finance Director

UNIC Machinery
Sales in the UNIC Machinery segment amounted to ¥27,961
million, a decrease of ¥343 million, and operating profit was¥1,547 million, a decrease of ¥617 million. In Japan, we reported
a decrease in sales mainly due to delays in crane installations
stemming from delays and cutbacks in truck production. We also
posted a decrease in profit due to a deteriorating cost rate caused
by price hikes of steel and other raw materials. Overseas, werecorded increases in both sales and profit thanks to higher
shipments of mini-crawler cranes in Europe and the United States
and UNIC cranes in Southeast Asia, Oceania, and the Middle East.

Message fromthe President

Electronics
Sales in the Electronics segment amounted to ¥6,926 million,a decrease of ¥345 million, and operating profit was ¥500 million,a decrease of ¥165 million. Sales of high-purity metallic arsenic
decreased as the market for compound semiconductors, a major
application for that material, entered an inventory adjustment
phase both in Japan and overseas. Sales of aluminum nitride
ceramics increased due to firm demand for their application inthermal management components and semiconductor manufacturing equipment components. We posted a decline in sales ofcoils due to cutbacks in automobile production stemming froma shortage of semiconductors and other factors.

About the GroupRock Drill Machinery
Sales in the Rock Drill Machinery segment amounted to ¥35,752
million, an increase of ¥4,841 million, and operating profit was¥3,030 million, an increase of ¥1,913 million. In Japan, both sales
and profit increased thanks to various factors. These included
growth in shipments of large models of hydraulic breakers, a shift
to highly functional models of tunnel drill jumbos, an increasein shipments of ancillary parts, and an increase in the numberof custom-ordered machines serviced. Overseas, we reported
higher sales and profit, mainly due to increased shipments ofhydraulic breakers, hydraulic crawler drills, and ancillary parts toNorth America, as well as the positive impact of the weak yen
on revenue.

Management Philosophy
and Vision

MetalsSales in the Metals segment amounted to ¥111,424 million, an
increase of ¥8,429 million, and operating profit was ¥1,276 million,
an increase of ¥336 million. The overseas market price of­electrolytic copper started at US$10,247/ton but declined to
US$7,000/ton on July 15 due to accelerated monetary tightening
measures by major central banks and China’s zero-COVID policy.
Subsequently, the price temporarily recovered to the US$9,400/
ton range in January 2023, supported by expectations of a recovery in demand in China and a slowdown in interest rate hikes in
the United States, but ended the fiscal year at US$8,935/ton.
Despite a decline in the sales volume of electrolytic copper, weachieved an increase in sales that was helped by a rise in the sales
volume of electrolytic gold coupled with the weaker yen.

the construction of the Shin-Kobotoke Tunnel on the Chuo
Expressway, but overall sales declined due to the postponement ofvarious projects.

Net Sales
Operating Profit

Integrated Report 2023

58

Materials Business Total
Total sales of the Materials business—consisting of the Metals,
Electronics, and Chemicals segments—amounted to ¥126,804
million, an increase of ¥8,640 million year on year, and operating
profit was ¥2,309 million, a decrease of ¥40 million.

Total liabilities at fiscal year-end amounted to ¥126,695 million,
down ¥2,957 million (2.3%) from a year earlier. Current liabilities
increased ¥3,252 million (5.4%), to ¥63,111 million. This was due
to a ¥3,103 million (23.0%) increase in short-term borrowings(including current portion of long-term debt), which offset a¥2,159 million (5.6%) decrease in payables (notes and accounts
payable–trade, electronically recorded obligations–operating, andaccounts payable–other). Non-current liabilities declined ¥6,209
million (8.9%), to ¥63,583 million, due mainly to a ¥5,926 million(11.4%) decrease in long-term borrowings.
Net assets increased ¥5,975 million (6.0%) year on year, to¥106,050 million. This was mainly due to a ¥3,401 million (4.2%)
increase in total shareholders’ equity, stemming from ¥6,211 million in profit attributable to owners of parent and ¥1,941 million
in dividends paid. Other factors included a ¥2,291 million (13.7%)
increase in total accumulated other comprehensive income, mainly
due to an increase in foreign currency translation adjustment
stemming from the yen’s depreciation.

Real Estate
Sales in the Real Estate business amounted to ¥2,056 million, adecrease of ¥58 million, and operating profit was ¥835 million, an
increase of ¥92 million. Revenue from the Muromachi Furukawa
Mitsui Building (commercial name: COREDO Muromachi 2), ourmain facility, increased thanks to the lifting of behavioral restrictions and the elimination of partial exemptions for rent payments
given to commercial tenants, although the commercial facility
market did not recover to pre-COVID-19 levels. On the other
hand, overall rental revenues declined mainly due to a decreasein business office rent revenues.
OthersThis segment covers metal powder, casting, transportation, andother businesses. We posted sales of ¥3,671 million, an increaseof ¥1,791 million year on year, and an operating loss of ¥133
million, compared with operating profit of ¥17 million in theprevious fiscal year.

R&D and Capital Investment

As of March 31, 2023, total assets amounted to ¥232,745 million,up ¥3,017 million (1.3%) from a year earlier. Current assets
increased ¥3,644 million (3.8%), to ¥99,882 million. This was
mainly due to a ¥7,158 million (25.3%) increase in notes andaccounts receivable–trade, and contract assets. By contrast, there
was a ¥2,335 million (4.8%) decrease in inventories due to lower
raw material volumes in the Metals segment. Non-current assets
edged down ¥626 million (0.5%), to ¥132,862 million. This wasdue to a ¥1,149 million (3.2%) decrease in investment securities
stemming mainly from the sale of such securities.

The Furukawa Company Group actively engages in R&D on
high-value-added products and new materials that meetwide-ranging market needs. In the fiscal year under review, total
research and development expenses amounted to ¥1,508 million,
up 12.9% from the previous fiscal year. Of this total, ¥21 million
was allocated to the Industrial Machinery segment, ¥143 million
to the Rock Drill Machinery segment, ¥290 million to the UNIC
Machinery segment, ¥104 million to the Electronics segment,¥208 million to the Chemicals segment, and ¥10 million to
Others. We also spent ¥728 million on corporate research aimed
at developing basic technologies for each segment and creating
new businesses. This was allocated to all of the businesssegments.
In fiscal 2022, we made capital investment (including purchaseof intangible fixed assets) totaling ¥4,187 million, down 12.4%
year on year. Of this total, ¥912 million was allocated to theElectronics
Net Sales (Billions of yen)
Operating Profit (Loss) (Billions of yen)

Material Business
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

Financial Position

7.2

6.5

5.5

6.9

5.7
0.6

Chemicals
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

7.8
6.7

6.1

8.4

6.3

92.7

0.4

0.5

0.5
0.3

0.1

'19/3 '20/3 '21/3 '22/3 '23/3
Net Sales
Operating Profit (Loss)

59 FURUKAWA CO., LTD.

79.3

0.7
0.5

0.4
(0.0)

118.1

'19/3 '20/3 '21/3 '22/3 '23/3
Net Sales
Operating Profit

1.3

126.8
1.1

88.2
2.3

0.7

Real Estate
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

2.3

1.0

'19/3 '20/3 '21/3 '22/3 '23/3
Net Sales
Operating Profit

2.9

0.7

0.7

0.7

2.3

2.1

2.1

0.8
2.0

'19/3 '20/3 '21/3 '22/3 '23/3
Net Sales
Operating Profit

About Integrated ReportManagement Philosophy
and Vision

Industrial Machinery segment, ¥708 million to the Rock Drill
Machinery segment, ¥504 million to the UNIC Machinery segment, ¥208 million to the Metals segment, ¥1,125 million to theElectronics segment, and ¥237 million to the Chemicals segment,
aimed primarily at improvements in production efficiency. In
addition, ¥3 million was allocated to maintenance of buildings
owned by the Real Estate business and ¥486 million went toOthers segment, mainly for measures to prevent pollution atsuspended mines. Funds for these expenditures are sourced frominternal funds and borrowings. Depreciation increased 2.8% year
on year, to ¥4,114 million.

About the GroupNet cash used in financing activities was ¥5,934 million, down
¥633 million. The main factor was a net decrease in interest-­
bearing debt (borrowings, net of repayments) of ¥2,869 million(down ¥1,155 million).
As a result, the year-end balance of cash and cash equivalents
totaled ¥13,606 million, down ¥862 million from a year earlier.

Consolidated Operating Cash Flow Allocation	and Capital Strategy

Message fromthe President

Cash Flows

Message from the
Finance Director
Management/Business
Strategies
Sustainability

In the fiscal year under review, net cash provided by operating
activities amounted to ¥6,148 million, down ¥2,620 million fromthe previous fiscal year. This was mainly due to an increase in
expenditures resulting from changes in assets and liabilities related
to operating activities, including a decrease in notes and accounts
payable–trade, as well as an increase in income taxes paid. By
contrast, there was increase in adjusted income from non-cash
profit/loss items.
Net cash used in investing activities totaled ¥1,617 million,
down ¥4,239 million. This was mainly due to ¥3,413 million inpurchases of property, plant and equipment and intangible assets(down ¥2,158 million year on year) and ¥1,380 million in proceeds from sale of investment securities (up ¥1,273 million). The
decrease in purchases of property, plant and equipment andintangible assets was mainly due to a ¥1,132 million decrease in
expenditures by the Industrial Machinery segment, which in theprevious fiscal year included the construction of a new officebuilding at the Oyama Works. The increase in proceeds fromsales of investment securities stemmed from the Company’s review
of strategic shareholdings. The Company annually examines theappropriateness of continuing to hold such shareholdings and sells
them as necessary to make effective use of assets and improvefinancial soundness.

Our Medium-Term Business Plan 2025 (April 1, 2023–March 31,2026) represents the final phase for realizing Vision for 2025.
Under the plan, our basic policy for allocating management
resources is to prioritize investments targeting sustainable growthand medium- to long-term improvements in corporate value, andthen to deliver stable and continuous shareholder returns.
As for allocated consolidated cash flows, we will strive toestablish a solid financial base while giving due consideration
to shareholder returns. At the same time, we will make capital
investments to achieve sustainable growth and enhance corporate
value over the medium to long term.
A summary of consolidated cash flow allocations for each phaseof Vision for 2025 is shown on the next page.
With respect to allocating funds to capital investments, theaccumulated amount of actual capital investments in Phase 1 was¥16,403 million (capital investments and other payments were
¥16,394 million) and Phase 2 was ¥13,110 million (capital investments and other payments were ¥12,459 million). We expect tomake cumulative capital investments of ¥20 billion in Phase 3, of
which ¥14 billion (or 70%) will go to our core Machinery business. We will continue making capital investments to strengthen
our manufacturing capabilities.
Regarding the reduction of interest-bearing debt (borrowings),
the balance of interest-bearing debt (borrowings) as of March 31,
2017, was ¥73,507 million. Since then, we reduced the balanceby ¥3,094 million in Phase 1 and ¥7,564 million in Phase 2.
(The increase/decrease in interest-bearing debt in “Summary ofGovernance

80.4

94.3 100.0
77.9

8.9

106.0

6.9

5.8

6.2

215.3 209.6 218.2

36.3

44.2
42.3

Cash Flows (Billions of yen)

11.7

229.7 232.7

42.0
36.0

Capital Investment (Billions of yen)
Depreciation (Billions of yen)

8.4
5.9

5.4
3.4

3.5

4.1
4.7
4.0
4.1
3.8

4.1

6.0
2.2

(3.1)

Total Assets
Equity-to-Asset Ratio'19/3 '20/3 '21/3 '22/3 '23/3
Capital Investment
Depreciation(6.5) (5.9)(5.8) (1.6)'19/3 '20/3 '21/3 '22/3 '23/3
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities

Integrated Report 2023

60

Financial Information'19/3 '20/3 '21/3 '22/3 '23/3

Net Assets
Return on Equity (ROE)

6.1
0(4.2) (4.8)(3.3) (5.0)'19/3 '20/3 '21/3 '22/3 '23/3

8.7

Social5.7

Total Assets (Billions of yen)
Equity-to-Asset Ratio (%)

Environmental

Net Assets (Billions of yen)
Return on Equity (ROE) (%)

Consolidated Cash Flow Allocation” does not include the increase/decrease due to foreign exchange translation differences.) The
balance of interest-bearing debt (borrowings) as of March 31,
2023, was ¥62,848 million. In Phase 3, we plan to reduce­interest-bearing debt by ¥10 billion. To realize this, we will continue working to establish a solid financial base that will enable
us to raise funds without being influenced by financial conditions.
In fiscal 2025, the final year of Vision for 2025, we envisage alevel of financial soundness that will prompt Japanese rating
agencies to raise their ratings to A– or higher, from the current
BBB+. To this end, we will continue striving to improve our­financial soundness.
With respect to dividends, we will strive to provide stable andcontinuous returns to shareholders by prioritizing investments toachieve sustainable growth and enhance corporate value over the
medium to long term. At the same time, we will consider increasing dividends and paying interim dividends, aiming for annual
dividends of at least ¥50 per share in principle and a consolidated
total return on equity of 3% or higher. In Phase 1, cumulative
appropriations of retained earnings totaled ¥5,958 million, andthe average consolidated total return on equity was 3.2%. In
Phase 2, cumulative appropriations of retained earnings totaled¥5,800 million, and the average consolidated total return on
equity was 2.6%.
Regarding share buybacks/cancellations, we will consider sharebuybacks and cancellations from time to time, taking into accounttrends in stock prices, capital efficiency, cash flows, and otherfactors. We will aim for share buybacks of approximately ¥1 billion
each fiscal year. In Phase 1, we bought back 1,186,300 sharesat a total cost of ¥1,628 million, and in Phase 2 we bought back
1,099,400 shares at a cost of ¥1,387 million. (The number ofshares bought back in “Summary of Consolidated Cash Flow
Allocation” includes shares bought due to requests for the­purchase of odd-lot shares.)
With respect to reducing strategic shareholdings, each year we
carefully examine the purpose of our holdings and whether the

Basic Earnings per Share (Yen)

190.73165.87 161.97

116.23112.23

benefits and risks associated with each holding are commensuratewith the cost of capital. We also examine the appropriatenessof continuing to hold shares after a comprehensive review that
includes both qualitative and quantitative aspects. We will strive
to reduce holdings of shares deemed to be no longer necessary by
selling them as appropriate. We will also continue disclosing theratio of strategic shareholdings to consolidated net assets as anindicator of our progress in reducing such shareholdings. As of
March 31, 2023, the ratio was 35.1%.

Analysis of Performance Indicators
Our Vision for 2025, FURUKAWA Power & Passion 150, willend in fiscal 2025 when we mark the 150th anniversary of theCompany’s founding. Under Vision for 2025, we are targeting
consolidated annual operating profit regularly in excess of ¥15
billion and double-digit ROE. Under Medium-Term Business Plan
2025 (April 1, 2023–March 31, 2026), which covers the final
phase of Vision for 2025, we have set the following performancetargets for fiscal 2025, the final year of the plan: consolidated
annual operating profit of approximately ¥13 billion and ROE
of 8%.
As a growth strategy to achieve these targets, we will review
and strengthen our business portfolio and visualize our business(product) portfolio strategies within each business segment toimprove profitability and identify low profit businesses (products).
We will concentrate our management resources to sustainably
grow our core Machinery business to a new level.
We will also strengthen efforts to improve ROE. Here, we will
make individual investment decisions with attention to profitability, taking into account risks associated with the investment andcost of capital, while stepping up efforts to improve efficiency andprofitability. In addition, by deploying a business portfolio management system that utilizes cost of capital, we will optimize
overall allocation of management resources to achieve sustainablegrowth and increase corporate value over the medium tolong terms.

Cash Dividends per Share (Yen)Consolidated Total Return on Equity (%)

50

50

50

50

50

Strategic Shareholdings Ratio (%)

43.6

39.4 38.0
36.0

3.9

3.1

35.1

2.8

2.5
2.4

'19/3 '20/3 '21/3 '22/3 '23/3'19/3 '20/3 '21/3 '22/3 '23/3
Cash Dividends per Share
Consolidated Total Return on Equity

61 FURUKAWA CO., LTD.

'19/3 '20/3 '21/3 '22/3 '23/3

About Integrated Report(Millions of yen, rounded down)

Phase 2
FY2020–2022
cumulative

Phase 3
FY2023–2025
cumulative (Image)

Cash flows from operating activities

25,537

20,95940,000

Payments for capital investment, etc.

(16,394)(12,459)(20,000)

2,078

7,230

Payments/collections of other investments(14,315)(5,229)(20,000)

Free cash flow

11,221

15,72920,000Interest-bearing debt

(3,058)(7,636)(10,000)

Cash dividends(6,017)(5,856)(7,000)Share buybacks(1,631)(1,388)(3,000)

(870)

(744)

(11,577)(15,626)(20,000)

OthersCash flows from financing activities

Message fromthe President

Cash flows from investing activities

About the Group

Phase 1FY2017–2019
cumulative

Message from the
Finance Director

Financial Indicators

Financial
indicators

FY2019FY2022

FY2025(Image)Debt-to-equity (D/E) ratio*1

0.9 times

0.9 times

0.6 times

0.5x range

Interest-bearing debt/
EBITDA ratio*2

7.6 times

5.7 times

4.8 times

3x range

Issuer credit rating

BBB (JCR)BBB (JCR)

BBB+ (JCR)

A– or higher(Japanese rating agency)

Management/Business
Strategies

FY2016(Base year forcomparisons)*1 Debt-to-equity (D/E) ratio = Interest-bearing debt (fiscal year-end) / Equity (fiscal year-end)*2 Interest-bearing debt/EBITDA ratio = Interest-bearing debt (fiscal year-end) / (Operating profit + Depreciation)

Performance

Operating profit

Indicators

Medium-TermBusiness Plan 2019

(Billions of yen)

Medium-TermBusiness Plan 2025

ROE
(%)

10
8

14

8

12

5.9

10

5.8

6.2

Sustainability

16

Medium-TermBusiness Policy 2022

Management Philosophy
and Vision

Consolidated Cash Flow Allocation

6

8
13.0

6

FY2016(Results)

FY2019(Results)

FY2022(Results)

FY2025(Targets)¥6.5 billion¥8.6 billion¥9.0 billion

Approx. ¥13 billion

5.9%

5.8%

6.2%

Approx. 8%

6.5

2

2

0

Performanceindicators

Operatingprofit40

ROE* Performance indicators in MediumTerm Business Plan 2025 do notaccount for new alliances and M&As.

Environmental

9.0

Governance

8.6

4

ROE Breakdown Analysis
Profitability
Return on sales

Efficiency
Total asset turnover

Leverage
Financial leverage

:

5.9%

2.84%

0.74 times

2.80 times

FY2019 (results)

:

5.8%

2.68%

0.78 times

2.76 times

FY2022 (results)

:

6.2%

2.90%

0.93 times

2.31 times

FY2025 (targets):

Approx. 8%

Improved

Improved

Down

Financial Information

FY2016 (results)

SocialROE* Comparison with FY2016
Integrated Report 2023

62

Segment Analysis
In order to strengthen and instill efforts to improve ROE, we have
set return on assets (ROA) as a performance and management
indicator for each segment, and we are working to improve
profitability (operating margin) and efficiency (total asset turnover), which are components of ROA. Our ROA results by segment
in fiscal 2016 (benchmark year), fiscal 2019 (final year of Phase 1),
and fiscal 2022 (final year of Phase 2) are shown on
pages 63 to 64.
Industrial Machinery
Compared with 0.5% in fiscal 2016 (benchmark year), ROA of
the Industrial Machinery segment improved 12.9 points to 13.4%
in fiscal 2019 (final year of Phase 1) and 5.5 points to 6.0% infiscal 2022 (final year of Phase 2). As a result of our efforts tostrengthen our engineering capabilities and move away frombeing a mere equipment manufacturer, we expanded our contractor business and attracted orders through technical proposals for
section plant construction projects related to material machinery.
As a result, our business performance and profitability (operating
margin) improved significantly. In fiscal 2019, profitability (operating margin) was high, at 12.2%, due to sales corresponding
to the volume of several large projects and remained stable inPhase 2 (10.7% in fiscal 2020, 6.8% in fiscal 2021, and 7.3% in
fiscal 2022).
Rock Drill Machinery
Compared with 2.9% in fiscal 2016 (benchmark year), ROA of theRock Drill Machinery segment declined 2.5 points to 0.4% in fiscal

2019 (final year of Phase 1) and increased 5.2 points to 8.1% in
fiscal 2022 (final year of Phase 2). In Phase 1, ROA improved infiscal 2017 and fiscal 2018, mainly due to strong shipments bothin Japan and overseas and improved profitability (operating
margin). In fiscal 2019, however, profitability (operating margin)
deteriorated due to higher costs associated with compliance withemission regulations in developed countries for hydraulic crawler
drills, as well as higher depreciation and other expenses from
capital investments. Efficiency (total asset turnover) also deteriorated due to increased investments in inventories and fixed assets.
In Phase 2, we recorded an operating loss in fiscal 2020 due tothe significant impact of COVID-19, but profitability (operating
margin) improved in fiscal 2021 and fiscal 2022 due to increased
revenue both in Japan and overseas. Efficiency (total asset turnover) also improved, mainly due to an improved receivables
turnover ratio and an improved inventory turnover ratio resulting
from efforts to optimize inventory levels.
UNIC Machinery
Compared with 11.2% in fiscal 2016 (benchmark year), ROA of
the UNIC Machinery segment improved 1.8 points to 13.0% infiscal 2019 (final year of Phase 1) and declined 6.2 points to 5.0%
in fiscal 2022 (final year of Phase 2). In Phase 1, we posted
improved profitability (operating margin) in Japan due to steadysales of the G-FORCE series of UNIC cranes, which underwent a
full model change with significant improvements in operability
and safety, as well as overseas, where we reorganized our sales
network and strengthened our sales capabilities while expanding
and reinforcing our production bases for machines destined for

ROA Transition
by Segment
Consolidated
ROA
Consolidated

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2016 (base year for comparisons)

3.2%

0.7

4.4%

6,545

FY2019 (base final year for Phase 1)

4.1%

0.8

5.3%

8,693

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2022(base final year
for Phase 2)

3.9%

0.9

4.2%

9,031

ROA Transition by Segment
Industrial Machinery

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2016 (base year for comparisons)

0.5%

0.9

0.6%

104

FY2019 (base final year for Phase 1)

13.4%

1.1

12.2%

3,208

Rock Drill Machinery

2.9%

0.9

3.3%

897

FY2019 (base final year for Phase 1)

0.4%

0.8

0.5%

142

11.2%

1.1

9.9%

2,578

FY2019 (base final year for Phase 1)

13.0%

1.0

12.5%

3,992

6.0%

0.8

7.3%

1,515

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2022(base final year
for Phase 2)

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2016 (base year for comparisons)

63 FURUKAWA CO., LTD.

FY2022(base final year
for Phase 2)

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2016 (base year for comparisons)

UNIC Machinery

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)

8.1%

1.0

8.5%

3,030

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2022(base final year
for Phase 2)

5.0%

0.9

5.5%

1,547

About Integrated Report
Message fromthe President
Message from the
Finance Director
Management/Business
Strategies

Electronics
Compared with 0.2% in fiscal 2016 (benchmark year), ROA of
the Electronics segment declined 0.7 point to –0.5% in fiscal
2019 (final year of Phase 1) and increased 5.8 points to 6.0% infiscal 2022 (final year of Phase 2). In Phase 1, ROA increased infiscal 2017 and fiscal 2018, mainly due to improved profitability ­(operating margin) of high-purity metallic arsenic, a mature
product, stemming from healthy demand for compound semiconductors, a main application for that product. In fiscal 2019(final year of Phase 1), we recorded an operating loss due to lower
sales and profits of mature products caused by the deteriorating
semiconductor market conditions. In Phase 2, both efficiency

About the Group

MetalsCompared with 6.2% in fiscal 2016 (benchmark year), ROA of theMetals segment declined 5.1 points to 1.1% in fiscal 2019 (final
year of Phase 1). This was due to deteriorating profitability (operating margin). In Phase 2, both efficiency (total asset turnover)and profitability (operating margin) improved due to increased
revenues and profits from higher metal prices, as well as improved
profits from contracted copper smelting due to a reduction incopper production. As a result, ROA in fiscal 2022 (final year of
Phase 2) was 3.7%. Profit in this segment fluctuates significantly,
because raw copper ore and bullion products are affected byinternational market trends—including supply–demand balance,
speculative transactions, and geopolitical and economic­conditions—while smelting profitability is impacted by copper
concentrate purchasing conditions. In particular, the recent copper

smelting business environment has been characterized by worsening ore purchasing conditions due to an unstable supply–demandbalance against a backdrop of strong purchasing demand, mainly
from China. In addition, smelters are increasing their investments
in environmental measures, as well as in maintenance andrenewal of aging facilities, and therefore face significant depreciation expenses and soaring operating costs. As a result, smelting
costs remain high, and achieving profitability in this business is
becoming more difficult every year. Under such conditions, weconcluded that the business viability of our contracted copper
smelting business was poor and terminated our agreement with
Onahama Smelting and Refining Co., Ltd., on March 31, 2023.
This will enable a significant reduction in unprofitable exports andpave the way for a drastic review aimed at securing the profitability of the contracted copper smelting business, a priority issue for
the Metals segment, and also help improve segment ROA.

Management Philosophy
and Vision

export. We also reaped the benefits of capital investments in the
Sakura Works, which began in fiscal 2016. In Phase 2, profitability(operating margin) has deteriorated in Japan since fiscal 2021,
due to declining segment revenue caused mainly by delays intruck production as a result of difficulties in procuring overseas
parts and delays in crane installation stemming from production
cutbacks. In addition, the cost of sales ratio worsened due tohikes in prices of steel and other raw materials. In the UNIC
Machinery segment, the fixed asset turnover ratio is deteriorating
due to increased depreciation costs associated with capital investments in the Sakura Works. Our challenge going forward, therefore, is to maximize the benefits of our capital investments while
improving profitability (operating margin).

Sustainability

Metals

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)

6.2%

2.4

2.6%

1,738

FY2019 (base final year for Phase 1)

1.1%

2.5

0.5%

301

Electronics

0.2%

0.8

0.3%

17

FY2019 (base final year for Phase 1)(0.5%)

0.8(0.6%)

(35)

0.3

2.1%

114

FY2019 (base final year for Phase 1)

3.1%

0.4

7.6%

510

Real Estate

FY2022(base final year
for Phase 2)

0.1

39.4%

1,265

FY2019 (base final year for Phase 1)

2.7%

0.1

30.7%

735

6.0%

0.8

7.2%

500

FY2022(base final year
for Phase 2)

3.1%

0.5

6.3%

532

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2022(base final year
for Phase 2)

3.1%

0.1

40.4%

835

Integrated Report 2023

64

Financial Information

4.0%

1,276

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2016 (base year for comparisons)

1.1%

Social

0.7%

3.2

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2016 (base year for comparisons)

3.7%

Environmental

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)FY2016 (base year for comparisons)Chemicals

FY2022(base final year
for Phase 2)

Governance

FY2016 (base year for comparisons)

Total
Operating
ROA
Asset
Operating
Profit(Operating
Turnover Margin(Millionsprofit)(Times)of yen)(total asset turnover) and profitability (operating margin) improvedfor several reasons. These included stable and firm demand forhigh-purity metallic arsenic for compound semiconductors andother applications, as well as increased sales of aluminum nitride
ceramics, a strategic product, on the back of higher demand
for use in heat-resistant components and semiconductor manufacturing equipment. In the Electronics segment, we will makecapital investments to increase aluminum nitride production tomeet growing demand for heat-dissipating components due
to advances in sophistication, integration, miniaturization, andthinning of electronic devices. In the process, we will reinforce theearnings foundation of this segment.
Chemicals
Compared with 0.7% in fiscal 2016 (benchmark year), ROA of
the Chemicals segment increased 2.4 points to 3.1% in fiscal
2019 (final year of Phase 1). This was due to improved profitability (operating margin) stemming from increased sales of existingproducts (such as sulfuric acid, cuprous oxide, and cupric oxide)and high-value-added sulfuric acid, which stabilized earnings. In
Phase 2, sales of cupric oxide increased due to strong demand for
its use in circuit boards, as well higher unit selling prices stemming mainly from rising copper prices. This led to increases inboth ­efficiency (total asset turnover) and profitability (operating
margin), the latter reaching 3.1%. Going forward, we will invest
to expand production facilities for cupric oxide. At the sametime, we will work to increase earnings from existing products,
strengthen the differentiation and development of high-quality
sulfuric acid, and commercialize and cultivate our metallic copper
powder products.
Real Estate
Compared with 4.0% in fiscal 2016 (benchmark year), ROA in theReal Estate business declined 1.3 points to 2.7% in fiscal 2019(final year of Phase 1) and increased 0.9 point to 3.1% in fiscal
2022 (final year of Phase 2). In Phase 1, we maintained ROA ataround 4% in fiscal 2017 and fiscal 2018 due to the steady operation of the Muromachi Furukawa Mitsui Building (commercial
facility name: COREDO Muromachi 2), our main building. In fiscal
2019, however, profitability (operating margin) deteriorated due
to a decrease in rental income from the Furukawa Osaka Building,which closed in December 2019 due to the exit of tenants, as well
as a decrease in rental income from the Muromachi Furukawa
Mitsui Building due to a reduction in the number of large officetenants. In Phase 2, we made partial rent reductions and exemptions in fiscal 2020 and fiscal 2021 for commercial tenants of
the Muromachi Furukawa Mitsui Building who were affected bya temporary closure and decline in visitors due to COVID-19.
Although we removed the exemptions in fiscal 2022, overall rental
income declined due to lower office rents. Seeking to effectively
utilize our business resources, we will work to enhance efficiency(total asset turnover) by selling idle assets and assets that are nolonger expected to contribute to earnings.

Business Risks(1) Foreign Exchange Fluctuations
The Furukawa Company Group engages in production, procurement, and sales activities in Japan and overseas, and therefore is
at risk of foreign exchange fluctuations in connection with its
65 FURUKAWA CO., LTD.

export business, the import of raw materials, primarily copper ore,and smelting and processing income. While the Group utilizes
foreign exchange contracts and other methods to mitigate thisrisk, its operating results and financial position may be adversely
affected by significant movements in exchange rates.
(2) Fluctuations in Nonferrous Metals Markets
International prices of electrolytic copper, a mainstay productof the Group, and other nonferrous metals are decided by the
London Metals Exchange (LME) in U.S. dollars to reflect international market conditions. Such prices fluctuate according to theinternational supply–demand balance, speculative transactions,international political and economic circumstances, and the like.
Accordingly, the Group utilizes forward delivery transactions andother hedging techniques to minimize the impact of fluctuating
LME prices. However, significant movements in such prices may
affect the Group’s operating results and financial position.
The Group also invests in overseas copper mines to procure
copper concentrate. Any fluctuations in LME prices may impact
the business performance of those mines, which may affect theGroup’s operating results and financial position.
(3) Interest Rates
The Group’s fiscal year-end balance of interest-bearing debt
was ¥62,848 million, equivalent to 27.0% of total assets. Any
increase in debt-related costs arising from changes in interest
rates may adversely affect the Group’s operating results and­financial position.
Although funding costs may increase if market interest rates
rise, the Group has prepared for sudden changes in interest rates
by utilizing an optimal combination of borrowing arrangements,
including fixed-rate instruments.
(4) Investment Securities and Land
Historically, the Furukawa Company Group has maintained holdings of investment securities, which are subject to market valuations, as well as land. As of March 31, 2023, the carrying value ofsuch securities as stated in the consolidated balance sheets was¥30,653 million, while land stood at ¥53,910 million. Accordingly,
the Group’s operating results and financial position are at risk of
impairment losses, losses from devaluation, and losses on sales of
securities and land prices decline significantly.
Regarding securities, every year the Board of Directors comprehensively considers the benefits and risks associated with individual holdings, both qualitatively and quantitatively, in order toverify the suitability of maintaining such holdings. Securities
judged to be unsuitable as a result of such verification are sold.
As for other fixed assets held by the Group, a significant deterioration of business conditions could result in a decline in profitability, while falling market prices could lead to impairment losses.
Any of these factors may adversely affect the Group’s operating
results and financial position.
(5) Fluctuations in Demand
The Furukawa Company Group’s products are sold both in Japanand overseas. Therefore, any major fluctuations in demand in its
major markets—such as Japan, North America, Europe, andAsia—may adversely affect the Group’s operating results andfinancial position.

About Integrated Report
Sustainability
Governance
Environmental
SocialForward-looking statements in the above section are based on
judgments of the Group as of June 29, 2023.

Management/Business
Strategies
Financial Information(9) New Product Development
The Group actively engages in new product development withthe aim of bringing to market products incorporating new technologies and functions that meet customer needs. In some of ourbusinesses, however, there are products that are in mature stagesof their life cycles. Such products may be subject to reduced
profit margins because they are difficult to differentiate fromthe competition. If the Group is unable to develop or market
new products that will become future pillars of such businesses,
its operating results and financial position could be affected asa result.

(13) Retirement Benefit Obligation
The employees of the Furukawa Company Group are covered bya defined benefit corporate pension plan and a non-contributory
funded employee pension plan. Liability for retirement benefits isprovided at an amount calculated based on the retirement benefit
obligation and the fair value of pension plan assets at the balance
sheet date as of March 31, 2023. In calculating retirement benefit
obligation, the Group adopts assumptions in connection with thediscount rate and expected rate of return on plan assets, as wellas other assumptions. However, the Group’s operating results andfinancial position are at risk in the event that the actual discountrate and expected rate of return on plan assets differ materiallyfrom the assumptions, as well as in the event of a change in theassumptions on which retirement benefit obligation are made.

Message from the
Finance Director(8) Product Quality
The Group manufactures products in accordance with globally
recognized quality control standards and strives constantly toestablish, maintain, and improve its quality assurance system.
However, there is no guarantee that all products will be defectfree in the future. To mitigate such risk, we take out productliability insurance, recall insurance, and the like. However, in theevent that a product defect leads to major liability claims or recallsthat exceed our expectations, public trust in the Group and its
products may be lost, which could affect its operating results andfinancial position.

(12) Official Regulations
The Furukawa Company Group engages in business in Japan andoverseas and thus is subject to legal regulations of various nations,
including rules related to licensing, taxation, the environment,labor, antitrust, and export controls. The Group takes care tofaithfully comply with such official regulations. Due to changes inlaws and regulations, however, existing legislation may be tightened, or new legislation enacted, which could increase the costof responding and impact business continuity, and thus affect
the Group’s operating results and financial position.

Message fromthe President(7) Natural Disasters, Infectious Diseases, andOther Force Majeure
The occurrence of natural disasters (such as earthquakes,­tsunamis, floods, and typhoons) and accidents (such as large-scale
fires) could cause substantial damage to the Group’s production
facilities and procurement sources and a breakdown of its distribution network. Also, the worldwide spread of infectious diseases,
such as COVID-19, could render inoperable the Group’s business
operations and owned facilities, as well as the operations of its
suppliers. Either of these events may prevent the Group fromsupplying products in a reliable manner, which could affect its
operating results and financial position.

(11) Environmental Protection
The Furukawa Company Group places the highest importance on
environmental protection, environmental safety, and prevention ofpollution at its various business sites, both in Japan and overseas,
respecting all laws and regulations. Furthermore, in Japan theGroup takes all necessary measures to ensure proper environmental management of suspended and abandoned mines, including
prevention of water pollution from such mines, as well as managing the safety of tailing dams. Due to changes in relevant regulations, however, legislation may be tightened and unexpected
situations may arise at each business site, which could increase
the cost of responding and thus affect the Group’s operating
results and financial position.

About the Group(6) Country Risk
The Furukawa Company Group conducts its production,­procurement, and sales activities on a global basis in order toexpand its sales network, strengthen cost-competitiveness, andreduce currency risk. Any number of local events could hamper
the Group’s smooth business operations. These include local
political unrest, sharp economic slowdown, deterioration of public
security, trade sanctions, cultural and legal differences, special
labor–­management relations, and terrorism. Such events could
affect the Group’s operating results and financial position.
The invasion of Ukraine by Russia may cause a decline in sales
due to suspension of shipments of products to Russia, an increasein costs due to higher prices for steel and other raw materials andfuel, and delays in marine transportation. Any of these factors
could affect the Group’s operating results and financial position.

(10) Human Resources
To achieve future growth, the Group hires talented people—
both new graduates and mid-career professionals—and provides
training to enhance their competitive strengths. If the Groupis unable to attract sufficient human resources required for its
business, however, its operating results and financial position
could be affected as a result.

Management Philosophy
and Vision

Due to the nature of its products, moreover, sales from­ omestic public works projects account for a high proportiondof net sales. Therefore, any major fluctuations in public investments may adversely affect the Group’s operating results andfinancial position.

Integrated Report 2023

66

Consolidated Financial Statements
Consolidated balance sheets(Millions of yen)

(Millions of yen)

FY2021

FY2022(As ofMarch 31, 2022)(As ofMarch 31, 2023)

AssetsCurrent assets
Cash and deposits¥ 14,469¥ 13,606

	Notes and accounts
receivable—trade,and contract assets

28,34435,502

	Merchandise andfinished goods

17,20518,705Work in process

10,813

12,213

Raw materials and supplies

20,81815,584

Other

4,635

4,318

	Allowance for
doubtful accounts

(48)

(47)

Total current assets

96,23899,882

Non-current assets
Property, plant and equipment
		 Buildings and structures, net

24,051

23,435

		
Machinery, equipment
and vehicles, net

8,789

9,384

		Land54,17053,910		 Leased assets, net

429

463

		 Construction in progress

517

900

		Other, net

3,018

2,888

		Total property, plantand equipment

90,976

90,981

376

317

		Investment securities

35,86034,711

		 Long-term loans receivable

4,495

4,573

		 Deferred tax assets

351

749

		 Retirement benefit asset

403

351

		Other

1,746

1,947

		
Allowance for
doubtful accounts

(720)

(769)

		Total investments andother assets

42,136

41,563

Total non-current assets

133,489¥229,727

Intangible assets

67 FURUKAWA CO., LTD.

(As ofMarch 31, 2022)

Liabilities
Current liabilities	Notes and accounts
payable—trade¥ 15,916
	Electronically recorded
obligations—operating
9,381
Short-term borrowings
13,504
Lease liabilities
188
Accounts payable—other
13,310
Income taxes payable
1,491
Provision for bonuses138	Provision for loss on construction
contracts—	Provision for environmental
measures
3
Other
5,924
Total current liabilities
59,859Non-current liabilities
Long-term borrowings
Lease liabilities
Deferred tax liabilities	Deferred tax liabilities forrevaluation
Retirement benefit liability
	Provision for environmental
measures
Other provisions
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities

FY2022(As ofMarch 31, 2023)¥ 14,397
9,244
16,607186
12,806
1,711
137
6
58
7,954
63,111

52,166302
10,501

46,240387
10,141

1,399
2,543

1,367
2,481

58
16
239
2,565
69,793
129,652

—
97
228
2,638
63,583
126,695

28,2082
54,557(2,197)80,57028,2082
58,847(3,086)
83,971

11,832

12,320

(292)
2,602

(77)
2,582

35

1,564

2,506

2,584

132,862

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated othercomprehensive income
	Valuation difference on
available-for-sale securities	Deferred gains or losses
on hedges
Revaluation reserve for land	Foreign currency translation
adjustment
	Remeasurements of defined
benefit plans	Total accumulated othercomprehensive income
Non-controlling interests
Total net assets

16,6832,821
100,075

18,974
3,103
106,050¥232,745

Total liabilities and net assets¥229,727¥232,745

Investments and other assets

Total assets

FY2021

About Integrated Report

Consolidated statement of income(Millions of yen)

FY2021

847
—
1,462
836
3,146

427
—
812
543
1,782
8,996

501
860
814
654
2,829
9,348

76
92
833
111
1,113

47
362
—
0
410

157
11
—
668
135
972
9,137
2,715
(264)
2,450
6,686
208
¥  6,477

302
133
324
470
19
1,252
8,506
2,811
(762)
2,049
6,457
245
¥  6,211

Consolidated statement of comprehensive income(Millions of yen)

FY2021

FY2022(Fiscal year ended
March 31, 2023)¥6,686¥6,457

527
(483)
723
547
20
1,335
8,021

491
106
1,413
77
282
2,373
8,830

7,771
250

8,522
308
Integrated Report 2023

Financial Information(Fiscal year ended
March 31, 2022)

SocialProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

Environmental

752
370
677
1,244
3,044

Governance

3,005
7,910
78
525
10
1,055
6,998
19,583
9,031

Sustainability

2,465
7,557
108
629
16
1,053
6,535
18,366
7,734Management/Business
Strategies¥214,190
185,575
28,615

Message from the
Finance Director¥199,097
172,995
26,101

Message fromthe President(Fiscal year ended
March 31, 2023)

About the GroupNet sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Freight and incidental costs
Salaries, allowances and bonuses
Provision for bonuses
Provision for retirement benefits
Provision of allowance for doubtful accounts
Research and development expenses
Other
Total selling, general and administrative expenses
Operating profit
Non-operating income
Dividend income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity method
Administrative expenses of inactive mountain
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on bargain purchase
Other
Total extraordinary income
Extraordinary losses
Loss on sale and retirement of non-current assets
Impairment loss
Loss on liquidation of subsidiaries
Demolition expenses of a rental building
Other
Total extraordinary losses
Profit before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

FY2022(Fiscal year ended
March 31, 2022)

Management Philosophy
and Vision

Consolidated statement of income and consolidated statement of comprehensive income

68Consolidated statement of cash flows(Millions of yen)

FY2021

FY2022(Fiscal year ended
March 31, 2022)(Fiscal year ended
March 31, 2023)¥   9,137¥   8,506

4,003

4,114

81

255

Loss (gain) on sales of investment securities

(92)

(362)

Share of loss (profit) of entities accounted for using equity method

(370)

860

Loss (gain) on bargain purchase

(833)

—

Increase (decrease) in retirement benefit liability

433

226

Interest and dividend income(878)(1,110)Interest expenses

427

501

Decrease (increase) in trade receivables

345(6,798)Cash flows from operating activities
Profit before income taxes
Depreciation
Loss (gain) on sale of property, plant and equipment(10,328)

3,219

Increase (decrease) in trade payables

5,955(2,143)

Increase (decrease) in accounts payable—other

3,700(1,119)Other, net

(877)

2,743

Subtotal

Decrease (increase) in inventories

10,703

8,892

Interest and dividends received

885

1,073

Interest paid

(429)

(494)

(2,484)(3,400)

94

76

8,768

6,148

(5,507)(3,361)

Income taxes paid
Other, net
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment

91

239

(123)

(261)

Proceeds from sale of investment securities

107

1,380

Purchase of shares of subsidiaries resulting in change in scope of consolidation

(352)

—

	Proceeds from a partial refund of consideration for acquisition from the seller by
adjusting the consideration of share of subsidiaries—

420

Proceeds from sale of property, plant and equipment
Payments for retirement of property, plant and equipment

Other, net
Net cash provided by (used in) investing activities

(71)

(34)

(5,857)(1,617)

Cash flows from financing activities
Proceeds from short-term borrowings

15,95757,408

Repayments of short-term borrowings(16,062)(58,300)

Proceeds from long-term borrowings

220

3,200

Repayments of long-term borrowings(4,140)(5,176)

Repayments of finance lease liabilities

(232)

(208)

Purchase of treasury shares

(334)

(888)

(1,953)(1,942)

Dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

69 FURUKAWA CO., LTD.

(22)

(25)

(6,568)(5,934)377

541(3,279)(862)

17,748

14,468¥ 14,468¥ 13,606

About Integrated Report

Fiscal year ended March 31, 2022

(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings

Treasury shares

Total
shareholders’ equity¥28,208¥ 2¥50,025¥(1,862)¥76,373(1,953)
6,477(1,953)
6,477
(334)
7

(334)
7
—
¥ 2

4,531
¥54,557(334)¥(2,197)

Message fromthe President—¥28,208

About the Group

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Reversal of revaluation reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

Share capital

4,196¥80,570

Accumulated other comprehensive income¥11,303¥ 351¥2,609¥(826)¥1,959¥15,396¥2,594 ¥ 94,364(1,953)
6,477
(334)
7

528
528
¥11,832

(644)
(644)
¥(292)(7)(7)¥2,602862
862¥   35547
547¥2,506

1,286
1,286¥16,683

227
1,513
227
5,710
¥2,821 ¥100,075(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings

Treasury shares

Total
shareholders’ equity¥28,208¥ 2¥54,557¥(2,197)¥80,570(1,941)
6,211(1,941)
6,211
(888)
19

(888)
19
—
¥ 2

4,290
¥58,847(888)¥(3,086)

3,401¥83,971

Environmental—¥28,208

Governance

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Reversal of revaluation reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

Share capital

Accumulated other comprehensive income
Total
Valuation
DeferredForeignaccumulateddifference on
gains or Revaluation currency Remeasurements
Nonotheravailable-for-sale losses
reservetranslationof definedcomprehensive controllingsecurities
on hedges for land adjustment benefit plansinterests
income¥11,832¥(292)¥2,602 ¥   35

¥2,506¥16,683

Total
net assets¥2,821 ¥100,075

487
487¥12,320215
215¥ (77)(19) 1,529(19) 1,529¥2,582 ¥1,564

77
77¥2,5842,291
2,291¥18,974

282
2,573
282
5,975
¥3,103 ¥106,050
Integrated Report 2023

70

Financial Information(1,941)
6,211
(888)
19

SocialBalance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Reversal of revaluation reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

Sustainability

Fiscal year ended March 31, 2023

Management/Business
Strategies

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Reversal of revaluation reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

Total
net assets

Message from the
Finance Director

Total
Valuation
DeferredForeignaccumulateddifference on
gains or Revaluation currency Remeasurements
Nonotherreservetranslationof defined
available-for-sale losses
comprehensive controllingsecurities
on hedges for land adjustment benefit plansinterests
incomeManagement Philosophy
and Vision

Consolidated statement of changes in equity

Corporate Data
Corporate Data (As of March 31, 2023)

Stock Data (As of March 31, 2023)

Company Name:

Furukawa Co., Ltd.

Number of Shares Authorized:

80,000,000 shares

Head Office:Number of Shares Outstanding:

40,445,568 sharesTel:

2-6-4 Otemachi, Chiyoda-ku, Tokyo
100-8370, Japan (Tokiwabashi Tower)+81-3-6636-9501

Date of Foundation:

August 1875

Number of Shareholders:

19,001

Date of Establishment:

April 1918

Stock Exchange Listing:Tokyo Stock Exchange: Prime Market

Securities Code Number:

5715

Employees:

2,831 (Consolidated)

Principal Shareholders(As of March 31, 2023)

Stock Transfer Agent:

Number of Percentage ofTotal Shares
Shares(%)(Thousands)

Composition of Shareholders(As of March 31, 2023)

The Master Trust Bank of Japan, Ltd. (trust account)

4,459

11.70

Financial Instruments Firms(Securities Companies)

Asahi Mutual Life Insurance Co.

2,373

6.22

1.60%

Seiwa Building Co., Ltd.

1,935

5.07

Kawashima Co., Ltd.

1,860

4.87

Custody Bank of Japan, Ltd. (trust account)

1,654

4.33

The Yokohama Rubber Co., Ltd.

1,341

3.51

SANKO Co., ltd.

1,000

2.62

Furukawa Electric Co., Ltd.
Akanekai, the Company's Employee Stock Holding Association

877
710

2.30
1.86

Chuo-Nittochi Co., Ltd.

687

1.80

Notes: 1. The above excludes the Company’s holdings of treasury stock, totaling		2,329,563 shares.
2. The Company’s holdings of treasury stock, totaling 2,329,563 shares,
		are excluded from shareholding ratio calculations.

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-0004, Japan

Treasury Stock

5.75%

Foreign Institutions

Individuals and Others

13.71%

23.23%

Other Japanese Companies

28.00%

Financial Institutions

27.71%* For information on Directors and Audit & Supervisory Board Members,
please see pages 35–36.

For the latest IR information and video of our presentations, please visit our corporate website.
The Investor Relations section of our website provides the latest IR news, IR
materials, management policies, and other information. Within that section,
the IR Library contains archived materials, such as the Integrated Report, Annual Securities Report, and presentation materials, as well as videos of financial
results briefings and medium-term business plan briefings for the most recent
one-year, including Q&A sessions.
●

IR News (financial results, timely disclosures, etc.)●

Management Policies (Management Plan, Corporate Governance, etc.)●

Consolidated Financial Highlights (Consolidated Statements of Profit,
Segment Performance, etc.)●

Shareholder Information (Composition of Shareholders, Dividend Policy, etc.)●

IR Library (Presentation Materials, Integrated Report, Annual Securities Report, etc.)

Information for Shareholders and Other Investors

Videos introducing products of the Furukawa Company Group that help resolve social issues
The features and strengths of Group products that help resolve
social issues are introduced in these videos (on YouTube). The Belt
Conveyor video introduces the excellent characteristics of our belt
conveyors, which improve efficiency (through labor savings,
shorter construction periods, and the like), as well as environmentally friendly, safe, and secure conveyance. The Tunnel Drill Jumbo
video introduces various products that have improved worker
safety and productivity at mountain tunnel construction sites,
along with third-party evaluations. Please take a look.
71 FURUKAWA CO., LTD.

【Belt Conveyor video】【Tunnel Drill Jumbo video】

Corporate History
1875

Began the operation of the Kusakura Copper Mine in ­Niigata(Company foundation).

1877

Began the operation of the
Ashio Copper Mine in Tochigi.

1900

Set up a machinery works at the
Ashio Copper Mine and enteredinto the machinery business.

1914

Manufactured the first rock drillin Japan.

1918

Spun off mining business from
Furukawa General Partnershipand established Furukawa Mining Co., Ltd.

1944

Bought Osaka Smelter of Toa
Chemical Smelting Co., Ltd., andestablished it as Osaka Cementation and Refining. Entered into
the chemical business.
Built the Oyama Works of theMachinery Division of the Ashio
Copper Mine in Tochigi.

The key to the success of the
Furukawa Company Groupbegan with the developmentof the Ashio Copper Mine.

The first domestic rock drill
was developed (for the Ashio
Copper Mine).

At the Oyama Works, pumps
and mining machinery for copper mines were manufactured,
not only for internal use but
also to sell externally.

2003

Established a joint company for the
manufacturing and distribution of
UNIC cranes in China.

2005

Spun off the Machinery business,
Metals business, and Electronic
Materials and Chemicals businessand shifted to a group management
structure as the Furukawa Company
Group to enhance management.

2007

Formed a capital and businessalliance for the GaN semiconductor
epi-wafer business with POWDEC
K.K.

2008

Furukawa Industrial Machinery
Systems Co., Ltd., merged with
Furukawa Otsuka Iron Works Co., Ltd.

2009

Made Tohpe Corporation, which
manufactures and distributes paints
and chemicals, into a consolidated
subsidiary.

2010

Acquired interest in Canadiancopper mine.

2011

Established a sales company ofrock drill products in India.

This is an affiliate company for
the UNIC business establishedin Taian, Shandong, China,
which manufactures anddistributes truck-mounted
cranes and other products.

Established sales company for
UNIC products in Russia.

1950

Built the Takasaki Works of theRock Drill Division in Gunma.

1951

Began manufacturing oftitanium dioxide and cuprous
oxide at Osaka Cementation
and Refining.

2012
At the Takasaki Works, rock
drills were mass produced, andwe established the position of aleading rock drill manufacturer.

2013

Completed the Furukawa /Outokumpu flash smelting plant
at Ashio Smelting and Refining.

1962

Completed research anddevelopment of high-purity(99.999%) metallic arsenic andcommenced with sales of it.

1987

Bought UNIC Corporation.

1989

The Japanese name changed
from Furukawa Kogyo Kabushiki Kaisha to Furukawa Kikai
Kinzoku Kabushiki Kaisha.

1990

Bought an American breaker sales
and manufacturing company.

1997

Established a manufacturer of
UNIC products / components
in Thailand.

1998

With the sale of all of its shares inFurukawa Commerce Co., Ltd., theGroup has withdrawn from the fuelsbusiness.
The Group exited the paints businesswith the sale of all of its shares in
Tohpe Corporation.

Muromachi Furukawa Mitsui
Building, consists of a commercial
facility (COREDO Muromachi 2),
offices, and rental accommodation.

Completed Muromachi Furukawa
Mitsui Building in Nihonbashi, Tokyo.
Arsenic is one of the byproducts generated during
the smelting stage of copper
concentrates.

“UNIC” has become asynonym for truck-mounted
cranes in Japan.

This is an affiliate company for
the UNIC business establishedin Rayong, Thailand, which manufactures truck-mounted cranes andother products.

2014

Established the Tsukuba Development
Center, which integrates a technology
research operation.

2015

Renewed Management Philosophy
and established Vision for 2025.

2018

Established sales company forrock drills and other products
in Malaysia.

2021

This is an affiliate company forthe construction and mining
machinery business establishedin Utrecht, Holland, which
distributes rock drill products.

An affiliated company for theelectronic materials businessmakes coils in Bulacan Province,
Philippines.

Consolidated head office functions
and relocated to Tokiwabashi Tower
in Otemachi, Tokyo.
Acquired Yamaishi Metal Co., Ltd.,a manufacturer of metal powder.

2023

Established a sales company ofrock drill products in Holland.

Established a coil processing
company in the Philippines.

Tokiwabashi Tower (in Tokyo
Torch redevelopment district)

The termination of entrusted smelting contract with Onahama Smelting
and Refining Co., Ltd.

Integrated Report 202372

2-6-4 Otemachi, Chiyoda-ku, Tokyo 100-8370, Japan(Tokiwabashi Tower)

https://www.furukawakk.co.jp